October 16, 2018 / 7:07 AM / 10 months ago

REFILE-Nikkei heavyweight shares rebound; retail stocks fall

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* Automakers, SoftBank rise after sharp declines on Monday

* Retail faces double whammy of tax hike and weak China demand

By Ayai Tomisawa

TOKYO, Oct 16 (Reuters) - Japan’s Nikkei rebounded on Tuesday supported by short covering in index heavyweights, but retailers fell on worries about domestic personal consumption and slowing demand from China.

The Nikkei share average ended 1.3 percent higher at 22,549.24, after tumbling 1.8 percent on Monday to close at its lowest level since Aug. 21.

Traders said that Tuesday’s gains were mainly due to a technical rebound, as the Nikkei was trading 5 percent below its 25-moving average, a sign of an oversold market.

“The selling was overdone. Now the Nikkei’s valuation is very cheap trading around 12 times its projected earnings,” said Takuya Takahashi, a strategist at Daiwa Securities.

Index-heavyweights such as SoftBank Corp and Fast Retailing rebounded, soaring 3.6 percent and 4 percent, respectively, after they were heavily sold on Monday.

Automakers also regained ground, with Toyota Motor rising 1.1 percent and Honda Motor 1.9 percent.

The overall Japanese market was dented on Monday after the U.S. Treasury Secretary Steven Mnuchin called for a clause in U.S. foreign trade pacts to deter currency manipulation.

On Monday, Prime Minister Shinzo Abe pledged to go ahead with increasing the national sales tax to 10 percent from 8 percent next October.

The retail sector, which has faced the double whammy of worries about slowing consumption in Japan and weak China demand, dropped for a fourth day.

Department stores underperformed, with Takashimaya Co falling 0.9 percent and Isetan Mitsukoshi 1.0 percent.

Cosmetics makers Shiseido Co shed 2.4 percent and Kose Corp tumbled 3.1 percent, while babybottle maker Pigeon Corp lost 8.2 percent. Some of these companies have large exposure to China.

The broader Topix rose 0.7 percent to 1,687.91. (Editing by Simon Cameron-Moore)

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