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Nikkei skids as weak China data, Fed exit plans chill sentiment
June 20, 2013 / 7:28 AM / 4 years ago

Nikkei skids as weak China data, Fed exit plans chill sentiment

* Nikkei down 1.7 pct, Topix off 1.3 pct as Fed comments
hurt mood
    * China's weak flash PMI drags down China-related
    * Real estate shares battered
    * Weak yen lends some support to currency-sensitive stocks

    By Tomo Uetake
    TOKYO, June 20 (Reuters) - Japan's Nikkei share average fell
on Thursday as weak China data further unsettled markets coming
to grips with Federal Reserve Chairman Ben Bernanke's
confirmation that the U.S. central bank could trim its
bond-buying programme later this year. 
    The benchmark Nikkei ended 1.7 percent lower at
13,014.58 points, retreating from a one-week high of 13,245.22
hit on Wednesday. It dipped below the 13,000 mark several times
during the session.
    "The market's weakness shows that the Fed's decision to
indicate exit strategy was too soon," said Masaru Hamasaki,
senior strategist at Sumitomo Mitsui Asset Management.
    Bernanke said on Wednesday the U.S. economy is expanding
strongly enough for the Fed to begin slowing the pace of its $85
billion monthly purchases of Treasuries and mortgage-backed
securities, with the goal of ending it in mid-2014.
    Equity markets, which have been underpinned by the massive
liquidity support from the Fed and other major central banks in
recent years, were also left to ponder a further dose of bad
news from China.
    Data released earlier in the day showed China's factory
activity dropped to a nine-month low in June as demand faltered,
hurting manufacturers with exposure to Asia's biggest
    The Nikkei China 50 index fell 1.7 percent.
Industrial robot maker Fanuc Corp fell 3.2 percent,
while construction machinery maker Komatsu Ltd tumbled
3.8 percent.
    "Chinese markets, especially Hong Kong stocks, reacted
sharply to today's flash PMI and this hurt market sentiment in
Tokyo," said Yuya Tsuchida, a strategist at Toyo Securities.
    "Some investors are waiting for the Nikkei to drop below the
(psychologically important) 13,000 mark to buy shares on dips.
That should support the market."
    The Nikkei has lost 16.7 percent since hitting a 5-1/2 year
peak on May 23 on concerns over Fed stimulus as well as slowing
growth in China, Japan's second-largest export market, and
disappointment over Prime Minister Shinzo Abe's recently
unveiled growth strategy to revive the economy.
    The broader Topix shed 1.3 percent to 1,091.81 in
relatively subdued trade, with 2.86 billion shares changing
hands, well below last week's daily average of 3.36 billion.    
    Real estate stocks were battered, with the sector subindex
 shedding 3.5 percent to become the worst performer on
the main board.  
    GS Yuasa Corp bucked the trend and jumped 5.9
percent after the German industrial group Robert Bosch GmbH
 said it had agreed to work on next-generation
lithium-ion batteries with the battery maker and Mitsubishi Corp

    Traders said a weaker yen helped some currency-sensitive
exporters to outperform the broader market. Mazda Motor Corp
 rose 2.2 percent and Fuji Heavy Industries Ltd 
added 1 percent, while Sony Corp eased 0.1 percent.
    The yen fell 0.6 percent against the dollar to 97.04
yen on Thursday as the U.S. currency rose broadly after the
Fed's policy meeting. 
    "As long as risk aversion does not intensify further,
Japanese equity valuations could be seen as attractive," said
Hiromichi Tamura, chief strategist at Nomura Securities
    The Nikkei entered a bear market last week after dropping
more than 20 percent from its May 23 multi-year high, but is
still up 25 percent this year, underpinned by sweeping
government and central bank stimulus steps.

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