December 5, 2016 / 2:37 AM / 9 months ago

Nikkei falls as Italian referendum result creates sell opportunity

TOKYO, Dec 5 (Reuters) - Japan's Nikkei share average fell on Monday after Italian Prime Minister Matteo Renzi's defeat in a constitutional reform referendum gave investors an opportunity to sell into a market that had rallied to 11-month highs late last week.

The Nikkei was down 0.5 percent at 18,327.60 after losing as much as 0.75 percent earlier in the session. The index had risen to 18,746.28 on Thursday, its highest since early January, on relief that OPEC agreed to cut output and as the yen slumped.

"The yen's rebound last weekend had already put stocks on the defensive, and Italy's referendum provided participants to take profits on a market that rallied last week," said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

Italy's Renzi vowed to resign following Sunday's stinging referendum defeat, leading to fears over the stability of the country's shaky banking system and more broadly the future of the European Union.

"The referendum result will have repercussions beyond Italy. But for now we have to see how the European and North American markets react to the vote outcome to get a clearer picture," Fujito said, explaining why the Nikkei's losses were relatively limited.

The banking sub-sector index underperformed to lose 1.9 percent amid concerns over the referendum's effect on Italy's banking system.

Mitsubishi UFJ Financial Group lost 2.5 percent, Sumitomo Mitsui Financial Group fell 1.8 percent and Mizuho Financial Group shed 1.4 percent.

Exporters were also on the defensive as the yen was off the previous week's lows, with Toyota Motor Corp off 0.6 percent and Bridgestone Corp down 1.5 percent.

Toshiba Corp was up 1.8 percent, extending gains to reach a 17-month high. It has risen steadily for nearly the past month after the conglomerate swung to an operating profit in the July-September quarter, driven by strong demand for NAND flash memory chips.

Via Holdings Inc rose as much as 13.8 percent after the restaurant franchise operator said it will be listed on the Tokyo Stock Exchange (TSE) first section from JASDAQ effective Dec. 9.

The broader Topix dropped 0.7 percent to 1,468.18 and the JPX-Nikkei Index 400 was also down 0.7 percent, at 13,170.27. (Reporting by Shinich Saoshiro; Editing by Eric Meijer)

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