Wednesday, November 2, 2011

Nikkei falls 2 percent on fresh flare-up in Greece worries

TOKYO (Nov 2): The Nikkei share average fell as much as 2 percent on Wednesday after overseas shares skidded on Greece's surprise call for a referendum on an European bailout plan that investors had hoped would be the solution to the region's sovereign debt woes.

The Nikkei fell below support its 25-day moving average around 8,728, which has now become a resistance point.

"The Nikkei cleanly sliced through support at its 25-day moving average with investors selling shares because Europe's situation is once again uncertain," said Kenichi Hirano, operating officer at Tachibana Securities.

"The run-up in U.S. and Japanese shares after the European plan was decided last week was too rapid, which is why markets just as suddenly gave back those gains," he added.

Investors are awaiting the outcome of the U.S. Federal Reserve's policy meeting, where the central bank could prepare markets for further monetary policy easing.

Hints of further easing would weigh on the dollar and lift the yen, at a time when Japanese authorities have vowed to take action to quell the currency's strength.

The Nikkei average .N225 was 1.9 percent lower at 8,670.30, after earlier falling as low as 8,656.19. The broader Topix index .TOPX dropped 1.9 percent to 739.85.

Japan on Monday sold a record of nearly $100 billion worth of yen that drove the dollar from a record low around 75.31 to a high of 79.51 and investors are wary of further intervention. - Reuters

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