July 10, 2012 / 6:36 AM / 7 years ago

Nikkei's slide extended by weak China data

* Nikkei marks four straight days of losses
    * China data adds to concerns of global slowdown
    * Nikon falls 7 pct, Intel to buy stake in competitor ASML

    By Sophie Knight and Hideyuki Sano
    TOKYO, July 10 (Reuters) - Japan's Nikkei share average fell
on Tuesday for the fourth straight session, reversing the
morning's gains after weaker-than-expected Chinese imports
stirred concerns about slowing demand in the world's second
largest economy.
    The Nikkei closed down 0.4 percent at 8,857.73, as investor
sentiment remained caught between recent gloomy data and the
vague hopes that it will prompt more easing by central banks.
    The Nikkei has now dropped 1.8 percent from a two-month high
of 9,136.02 hit on July 4, following a month-long rally. It also
landed on a key trend-line that connects the intraday lows of
June 4 and June 26-27 around 8,856, which some players interpret
as a sign that its bull run since early June is over.
    "The market is likely to be pretty directionless through
July. There's no real incentives for another sell-off, but the
recent rally left it quite overheated according to technical
indicators," said Hisao Matsuura, vice president of equity
strategy at Nomura Securities. 
    After rising as much as 0.8 percent in the morning, the
benchmark index lost gains ain data showing China's imports rose
6.3 percent from a year ago in June, about half of what
economists had expected.
    "The global economy is clearly deteriorating and there are
worries whether China can gain momentum without fiscal
stimulus," said Hisashi Kuroda, general manager of equity
investment at Meiji Yasuda Asset Management.
    Hopes of more stimulus from China and elsewhere are playing
an important role in supporting the market, with investors now
eyeing the Bank of Japan's policy meeting on Wednesday and
    But there are increasing doubts that the BOJ will stand pat
on policy after it released a rather sunny outlook in an
economic report last week, upgrading its assessment for all nine
regions of the economy for the first time in nearly three years
and saying post-tsunami domestic demand was
    "Media reports that the BOJ may stay on hold are worrying -
deteriorating data releases argue very much to the contrary,"
said Naomi Fink, Japan equities specialist at Jefferies, in a
    One such piece of data was a fall of 14.8 percent in
Japanese machinery orders in May from the previous month,
announced on Monday, and the largest drop since comparable
numbers became available in April 2005.
    "We opine that effectively withdrawing stimulus, which would
be the general idea of suspending even under-bid short-term
operations without longer maturities, would be a very bad idea,"
Fink continued.
    Other market analysts have noted that the effect of easing
on global equities and national economies has become blunter
over time, and are looking to other factors to sway the market.
    "The catalyst for something to change will be yen weakness,"
said Trevor Hill, managing director of equities at UBS
Securities. "If we were to see a significant weakening of the
yen, folks are not positioned to capture returns on the rally
from the exporters. People have continued to get more and more
defensive with their exposures."
    The broader Topix index shed 0.7 percent to 758.60.
    Oil and coal finally turned around more than six
months of underperformance to become the best performing
subindex with a gain of 1.7 percent. The sector's sharp climb
came after its ratio against the Topix hit a two-year low on
    But consumer electronics companies lagged, with Sharp Corp
 shedding 4.2 percent to a fresh 28-year low after
announcing an out of court settlement with Dell Inc and
two other companies over its TFT digital business. 
    Sony Corp fell 2.5 percent, while Panasonic Corp
 dropped 1.3 percent after failing to impress with a new
business plan designed to shake up the sprawling electronics
maker, announced on Monday. 
    Nikon Corp was knocked down 7 percent after Intel
Corp said it would buy a 15 percent stake in Nikon
competitor ASML, which etches circuits onto silicon
wafers and is experimenting with extreme ultraviolet tech (EUV),
an area where the Japanese camera maker has made little
    Investors put their weight behind safer domestic bets, with
the foods and pharmaceuticals in positive
territory with gains of 0.1 and 0.2 percent respectively.
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