TOKYO:'' Japan's Nikkei dropped 1.4 percent on Friday, Nov 12 from a 4-'' month closing high marked the day before, with profit-taking intensifying as Chinese shares fell sharply and as oil and other commodity prices plunged.
Shares came under pressure due to growing wariness over possible further monetary tightening in China, forcing fund operators to lock in profits from risk assets.
Profit-takers also sold on rekindled fears about some euro zone countries' debt problems, including Ireland.
But market participants in Tokyo were not overly pessimistic on Japanese stocks as they believe the recent bullish trend is still in place due to generally strong corporate results and recent falls in the yen against the dollar, traders said.
"The Nikkei was pressured after seeing Shanghai shares drop more than 3 percent. Profit-taking emerged as the market could be a bit concerned about the recent rapid rise in share prices," said Hiroaki Kuramochi, chief equity marketing officer at Tokai Tokyo Securities.
The Nikkei ended the day down 1.4 percent, or 136.65 points, at 9,724.81. That marked its biggest daily percentage loss since October 29.
Up until Thursday, the Nikkei had posted strong gains since the start of the month, advancing nearly 8 percent. It closed at 9,861.46 the previous day, booking its highest close since June 24, when it last traded above 10,000.
The broader Topix index closed down 1.1 percent, or 9.39 points, at 846.98.
Japanese shares came under strong profit-taking pressure as Chinese share and commodities prices tumbled due to speculation over a possible new round of Chinese tightening measures.
The Shanghai Composite Index dropped 5.3 percent to 2,979.68, while Hong Kong's Hang Seng Index fell 1.6 percent to 2,4302.55.
China's official Securities Times reported that Beijing plans to limit foreigners from investing in its already speculative real estate sector.
"The Nikkei could come under further profit-taking pressure if commodities prices extend their losses. But there is likely to be a limit on selling the Nikkei too strongly from here," Kuramochi said, adding that it would find support at 9,500.
Spot gold lost more than one percent in a broad retreat triggered by a stronger dollar.
Oil prices dropped as much as 1.8 percent, erasing this week's gain to two-year highs.
NIKKEI MAY TEST 10,000
Still, many analysts said potential gains in Japanese shares were in store as the outlook for the global economy brightens and as the dollar regained some ground against the yen.
The greenback rose above 82 yen this week for the first time since early October. By late Asian trade, the dollar was down 0.2 percent at 82.30 yen.
Many equities traders still expect the Nikkei to eventually rise to the closely watched 10,000 level. After reaching that point, analysts see this year's high of 11,408.17, hit in April, as its next target.
"The Nikkei could regain strength towards 10,000 depending on the yen. The Nikkei will target that level if the yen weakens towards 85 (against the dollar)," said Masaru Hamaski, a senior strategist at Toyota Asset Management.
Analysts said the market was closely watching the outcome of the G20 summit in South Korea, where discussion was expected to include exchange rate policies and global economic imbalances.
Shares of exporters that had led gains in recent sessions lost steam, with Advantest down 2.9 percent and TDK slipping 2.3 percent.
Bank shares that had strengthened after the Financial Times reported this week that most major Asian banks could be exempt from planned global regulations also fell.
Mitsubishi UFJ Financial Group closed down 1.8 percent at 392 yen and Sumitomo Mitsui Financial Group declined 1.8 percent to 2,509 yen.
Mizuho Financial Group dropped 2.3 percent to 127 yen, after the Nikkei business daily reported that the bank would buy a stake of about 2 percent in BlackRock Inc, the world's largest money manager, for $500 million.
Shares of Disco Corp plunged 13.6 percent to 4,510 yen after the maker of semiconductors lowered its full-year earnings and dividend forecasts.
Disco lowered its full-year sales forecast to 98 billion yen ($11.88 million) from the previous estimate of 102 billion yen. It also slashed its full-year operating profit forecast to 14.5 billion yen from 18.8 billion yen.
Trade slowed on the Tokyo exchange's first section, with 1.8 billion shares changing hands, down from a one-month high hit this week above 2.2 billion shares. Declining stocks outnumbered advancing ones by more than 3 to 1. - Reuters
Shares came under pressure due to growing wariness over possible further monetary tightening in China, forcing fund operators to lock in profits from risk assets.
Profit-takers also sold on rekindled fears about some euro zone countries' debt problems, including Ireland.
But market participants in Tokyo were not overly pessimistic on Japanese stocks as they believe the recent bullish trend is still in place due to generally strong corporate results and recent falls in the yen against the dollar, traders said.
"The Nikkei was pressured after seeing Shanghai shares drop more than 3 percent. Profit-taking emerged as the market could be a bit concerned about the recent rapid rise in share prices," said Hiroaki Kuramochi, chief equity marketing officer at Tokai Tokyo Securities.
The Nikkei ended the day down 1.4 percent, or 136.65 points, at 9,724.81. That marked its biggest daily percentage loss since October 29.
Up until Thursday, the Nikkei had posted strong gains since the start of the month, advancing nearly 8 percent. It closed at 9,861.46 the previous day, booking its highest close since June 24, when it last traded above 10,000.
The broader Topix index closed down 1.1 percent, or 9.39 points, at 846.98.
Japanese shares came under strong profit-taking pressure as Chinese share and commodities prices tumbled due to speculation over a possible new round of Chinese tightening measures.
The Shanghai Composite Index dropped 5.3 percent to 2,979.68, while Hong Kong's Hang Seng Index fell 1.6 percent to 2,4302.55.
China's official Securities Times reported that Beijing plans to limit foreigners from investing in its already speculative real estate sector.
"The Nikkei could come under further profit-taking pressure if commodities prices extend their losses. But there is likely to be a limit on selling the Nikkei too strongly from here," Kuramochi said, adding that it would find support at 9,500.
Spot gold lost more than one percent in a broad retreat triggered by a stronger dollar.
Oil prices dropped as much as 1.8 percent, erasing this week's gain to two-year highs.
NIKKEI MAY TEST 10,000
Still, many analysts said potential gains in Japanese shares were in store as the outlook for the global economy brightens and as the dollar regained some ground against the yen.
The greenback rose above 82 yen this week for the first time since early October. By late Asian trade, the dollar was down 0.2 percent at 82.30 yen.
Many equities traders still expect the Nikkei to eventually rise to the closely watched 10,000 level. After reaching that point, analysts see this year's high of 11,408.17, hit in April, as its next target.
"The Nikkei could regain strength towards 10,000 depending on the yen. The Nikkei will target that level if the yen weakens towards 85 (against the dollar)," said Masaru Hamaski, a senior strategist at Toyota Asset Management.
Analysts said the market was closely watching the outcome of the G20 summit in South Korea, where discussion was expected to include exchange rate policies and global economic imbalances.
Shares of exporters that had led gains in recent sessions lost steam, with Advantest down 2.9 percent and TDK slipping 2.3 percent.
Bank shares that had strengthened after the Financial Times reported this week that most major Asian banks could be exempt from planned global regulations also fell.
Mitsubishi UFJ Financial Group closed down 1.8 percent at 392 yen and Sumitomo Mitsui Financial Group declined 1.8 percent to 2,509 yen.
Mizuho Financial Group dropped 2.3 percent to 127 yen, after the Nikkei business daily reported that the bank would buy a stake of about 2 percent in BlackRock Inc, the world's largest money manager, for $500 million.
Shares of Disco Corp plunged 13.6 percent to 4,510 yen after the maker of semiconductors lowered its full-year earnings and dividend forecasts.
Disco lowered its full-year sales forecast to 98 billion yen ($11.88 million) from the previous estimate of 102 billion yen. It also slashed its full-year operating profit forecast to 14.5 billion yen from 18.8 billion yen.
Trade slowed on the Tokyo exchange's first section, with 1.8 billion shares changing hands, down from a one-month high hit this week above 2.2 billion shares. Declining stocks outnumbered advancing ones by more than 3 to 1. - Reuters
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