Nikkei falls as yen bounces after Swiss jolt; down for a third week

* Switzerland’s move sends Nikkei to 2-1/2-month low during trade * The dip may create buying opportunity between now and ECB – trader * Nikkei falls for a third week * Fast Retailing, SoftBank together take hefty points off from Nikkei By Ayai Tomisawa TOKYO, Jan 16 (Reuters) – Japan’s Nikkei share average skidded on Friday in volatile trade as risk appetite was dampened by a strong yen after Switzerland stunned markets by abandoning its cap on the franc.

Index-heavy shares tumbled, with SoftBank Corp and Fast Retailing Co fell 2.5 percent and 3.7 percent, respectively. The two companies together took a hefty 83 points off the index, more than 30 percent of the Nikkei’s losses.

The Nikkei ended 1.4 percent lower at 16,864.16 after earlier sliding to 16,592.57, the lowest level since Oct. 31, when the Bank Of Japan unexpectedly eased monetary policy.

The Swiss National Bank scrapped its cap on the franc in a sudden move, pushing the Swiss currency up sharply, depressing the euro and stoking demand for the safe-haven yen.

Traders assumed the Swiss had moved with the knowledge that the European Central Bank would launch large-scale quantitative easing at its policy meeting on Jan. 22.

Towards the market close, hopes for buying of Japanese stocks by pension funds and the BOJ trimmed the losses while many investors also saw the sharp losses presenting a buying opportunity.

For the week, the Nikkei dropped 1.9 percent, falling for a third week.

“A period between today and the next ECB meeting is seen as a good buying opportunity,” said Takatoshi Itoshima, chief portfolio manager at Commons Asset Management. “For mid-to-long term traders, now is the time to buy. But for short-term traders such as prop traders, they may want to sell as the index breached a December low.” Many traders had been looking at 16,672.94 marked on Dec. 17 as an immediate support level.

Isao Kubo, equity strategist at Nissay Asset Management, said that opinions were divided on whether selling in the Japanese market has reached a climax.

“There is a lot of uncertainty in the market with expectations that the ECB will ease,” Kubo said. “The market may recover then (if the ECB eases), but it also depends on when selling in U.S. shares will stop as the Japanese market tends to follow suit.” The dollar hit a fresh one-month low of 115.90 yen, before regaining some ground at 116.60.

The broader Topix dropped 0.9 percent to 1,363.73 and the JPX-Nikkei Index 400 fell 0.9 percent to 12,377.59.

(Editing by Eric Meijer & Shri Navaratnam)