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Nikkei slumps to near one-month low as yen strength fans bleak mood
May 30, 2013 / 3:12 AM / 4 years ago

Nikkei slumps to near one-month low as yen strength fans bleak mood

* Strong yen exacerbates already sour mood - analyst
    * Exporters, real estate stocks lead decline
    * Fed stimulus outlook key for market direction - analyst

    By Ayai Tomisawa
    TOKYO, May 30 (Reuters) - The Nikkei share average fell to a
near one-month low on Thursday morning as the dollar dropped
further against the yen, triggering a sell-off in exporters, and
extending the benchmark's losses to well over 12 percent since
last Thursday's plunge.
    The benchmark Nikkei fell 2.8 percent to 13,932.92
at the midday break after dropping as low as 13,879.93 earlier,
the lowest since May 2. 
    The latest decline has pulled the Nikkei 12.6 percent below
the 5-1/2-year high reached last week. 
    Exporters were hit hard after the dollar  dropped as low as
100.585 yen in early Asia, its lowest level since May
10. 
    Honda Motor Co dropped 3.0 percent, Sony Corp
 fell 2.6 percent and Komatsu Ltd shed 2.4
percent.
    The real estate sector, which was the worst
sectoral performer, was down 5.4 percent, as investors took
profits. The sector is up 33 percent this year, supported by the
Japanese government's reflationary policies.
    Mitsubishi Estate Co tumbled 5.2 percent and Mitsui
Fudosan Co dived 5.3 percent.
    The Topix dropped 2.1 percent to 1,154.07, with 31
of the 33 subsectors in negative territory.
    Analysts said the rising yen further dented already
depressed sentiment after U.S. stocks weakened overnight on
ongoing fears that the Federal Reserve might soon begin scaling
back its massive stimulus programme.
    Investors have remained on edge since last Thursday when the
Nikkei dived 7.3 percent, its worst single-day loss since the
March 2011 earthquake and tsunami. The subsequent days have also
seen some extreme volatility, with a rebound in the yen, the Fed
stimulus worries and a slowdown in China making investors
uneasy.  
    "The rising yen is just a minor reason that triggered
further selling. The fundamental concern that's been in
investors' heads is the possibility that the Fed is exiting from
quantitative easing," said a fund manager at a U.S. hedge fund.
    Analysts expect volatility in Japanese equities to persist
over the next few weeks, with U.S. economic data closely watched
for clues on how they could affect the Fed's exit strategy and
foreign exchange markets.
    "People are worried that a winding down of quantitative
easing could end the generous supply of money, leading to a
surge in interest rates and a downturn in stock prices and
economies," Ryoji Musha, president of Musha Research wrote in a
report.
    The Nikkei is up 13 percent since April 4, when the Bank of
Japan announced a sweeping monetary expansion campaign to
eradicate years of deflation and revive growth. The aggressive
stimulus pursued by the central bank and government has driven
the index up 34 percent so far this year.

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