April 1, 2013 / 7:16 AM / 5 years ago

Nikkei falls to 3-week low on profit-taking; BOJ meeting eyed

* Nikkei falls 2.1 pct, Topix sheds 3.3 pct
    * Profit-taking on reflationary stocks weighs
    * Tepco bucks weakness on drastic cost cuts

    By Ayai Tomisawa
    TOKYO, April 1 (Reuters) - Japan's Nikkei share average fell
to a three-week low on Monday as investors took profits in
stocks such as exporters and financials that had gained in
recent weeks on the back of a weaker yen and prospects of
monetary easing.
    All 33 subindexes were lower on Monday, the first trading
day of the new fiscal year, with exporters, financials and real
estate stocks among the big losers.
    The Nikkei dropped 2.1 percent to 12,135.02, the
biggest one-day decline in a week. The index added 19.3 percent
in January-March, marking its best quarterly performance since
April-June 2009.
    Now, it stands 4.1 percent below a 4 1/2-year high of
12,650.26 hit on March 21.
    "Short-term foreign investors were selling today, as they
decided to take profits as they saw that hopes for bold monetary
easing are mostly priced into the market," said Makoto Kikuchi,
the chief executive of Myojo Asset Management. 
    "That is not to say that sentiment is negative. People are
still hopeful about easing, and we see some buying by long-term
investors like pension funds that are raising their stance to
'neutral' from 'underweight' on Japan."
    Toyota Motor Corp dropped 2.1 percent, Sony Corp
 tumbled 4.3 percent, and brokerage Nomura Holdings
 shed 4.3 percent.
    Railway stocks, which have high asset value, weakened, with
East Japan Railway Co shedding 5.8 percent and West
Japan Raiway Co dropping 7.2 percent, which was also
hit by a brokerage downgrade.
    Warehouse shares also lost ground, with Mitsui-Soko Co
 nosediving 8.1 percent and Shibusawa Warehouse Co
 shedding 5.2 percent.
    The losses came even as a Bank of Japan tankan survey showed
that business sentiment in Japan improved for the first three
months of 2013 due to expectations for the central bank to ease
monetary policy.
    Big manufacturers' mood improved after two straight quarters
of deterioration, with the headline sentiment index rising 4
points to minus 8, in line with a median market forecast of
minus 7.
    The survey comes ahead of the BOJ's first policy-setting
meeting under new Governor Haruhiko Kuroda on April 3-4, when
the board is set to expand monetary stimulus and debate an
overhaul of its policy framework. 
    "The tankan result was not remarkable, but if the result
were too good, it could spur worries that the central bank may
not have to ease policy drastically, so the result was after all
good for the market," said Hikaru Sato, a senior technical
analyst at Daiwa Securities.    
    The broader Topix declined 3.3 percent to 1,000.57,
falling below its 25-day moving average of 1,017.94. Volume was
thin, with 2.85 billion shares changing hands, compared with
last month's daily average trading volume of 3.24 billion
    The Nikkei has gained 16.7 percent this year, outperforming
its global peers. By comparison, the Dow Jones Industrial
Average has added 11.3 percent, the Standard & Poor's 500 Index
has gained 10 percent while the pan-European FTSEurofirst 300
index has advanced 4.8 percent over the same period.
    Helped by the rally, Japanese equities now carry a 12-month
forward price-to-earnings ratio of 14.2, a level not seen since
July 2010 though still below the 10-year average of 16.4,
according to Thomson Reuters Datastream.
    "Investors are expected to buy exporters again when their
outlooks for this fiscal year will be out next month," said
Myojo's Kikuchi, adding that the Nikkei will likely continue
outperforming its global peers.
    Bucking the weakness on Monday, Tokyo Electric Power Co
 surged as much as 12.6 percent before ending up 4.3
percent after the utility company announced an additional
cost-cutting plan for the two fiscal years ending March 2015.
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