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Japan's Nikkei retreats from 3-mth high on ECB doubts
August 21, 2012 / 6:47 AM / 5 years ago

Japan's Nikkei retreats from 3-mth high on ECB doubts

* Sharp gains on report of plant sales, job cuts
    * Defensives in demand, Softbank up
    * Japan Tobacco falls on report of EU probe
    * Trading volume on Topix light, 2nd lowest this year

    By Dominic Lau
    TOKYO, Aug 21 (Reuters) - Japan's Nikkei share average
retreated from a three-month high on Tuesday on creeping doubts
over the European Central Bank's plan to tackle the region's
debt crisis, although investors buying defensive stocks offered
some support to the market.
    Expectations that the ECB would take bold action to tackle
the euro zone sovereign debt crisis have helped the Nikkei
rebound 10 percent from a seven-week low touched on July 25. The
Nikkei is up 8.3 percent so far this year.    
    But the market is still awaiting further details of the
ECB's plans, and the central bank on Monday quashed speculation
about the form of its bond-buying programme, while there are 
signs of fatigue after the Nikkei's sharp run-up.
    The Nikkei slipped 0.2 percent to 9,156.92 but held
above its 26-week moving average at 9,149.50. The benchmark
edged up 0.1 percent on Monday, hitting a three-month closing
high for a second session in a row.
     "The jury is out as to whether when we come back after the
summer holidays, we will return to the old uncertainty that we
saw going into the summer holidays," said Stefan Worrall,
director of equity cash sales at Credit Suisse in Tokyo.
    Worrall said investors would be watching for comments from
European policymakers after they return from holidays as to how
they would tackle the region's debt problems.
    Some defensive stocks gained.
    "There are some appetite for cyclical stocks, but on the
balance most people want to really be careful," said a
Tokyo-based analyst who declined to be identified.
    Among defensive names he liked were telephone companies and
convenience store operators.
    Nippon Telegraph and Telephone Corp advanced 0.6
percent, while mobile operators Softbank Corp and KDDI
Corp gained 1.4 and 0.9 percent, respectively.    
    Convenience store operators Seven & I Holdings Co,
Lawson Inc and FamilyMart Co Ltd were up
between 1 percent and 1.5 percent.
    But Japan Tobacco Inc dropped 1.7 percent after the
Wall Street Journal said in its online edition that the European
Union is investigating whether a sale of cigarettes by a
Swiss-based unit of Japan Tobacco to a firm liked to cousins of
Syrian president violated its sanction against Syria.   
    The broader Topix added 0.1 percent to 765.26 in
light trade, with 1.23 billion shares changing hands, the second
lowest level this year.
    The market's recent rebound has further lifted the Topix's
12-month forward price-to-book ratio to 0.85, from a four-year
low of 0.8 hit in the first week of August, data from Thomson
Reuters Datastream showed. That compares with the U.S. S&P 500's
 1.9 and the STOXX Europe 600's 1.36.
    
    CAUTION URGED ON SHARP
    Sharp Corp rose 2.9 percent and was the most-
traded stock on the main board by turnover after the Yomiuri
newspaper said the embattled TV maker aims to cut 8,000 jobs or
15 percent of its global workforce, including 3,000 from the
sale of two TV factories in China and Mexico. 
    But traders said Sharp shares were best to avoid as the
company had a long way to recovery.
    Short-selling in Sharp increased, with 92.21 percent of its
stock that is available to be borrowed out on loan as of Aug 17,
up from 92.15 percent on Aug 16, according to data provider
Markit. 
    Economy-sensitive shippers were down 1.7 percent
as the worst sectoral performers, while traders said a downgrade
by SMBC Nikko Securities weighed on construction machinery maker
Komatsu Ltd, which lost 2.8 percent.

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