Nikkei falls back on profit-taking

Stock prices retreated Tuesday, pressured by profit-taking a day after the Nikkei 225 average ascended to its highest closing level in seven years and seven months.

The Nikkei lost 17.68 points, or 0.10 percent, to end at 17,987.09. On Monday, the key market gauge rose 91.41 points to close above 18,000 for the first time since July 24, 2007.

But the Topix closed up 2.64 points, or 0.18 percent, at 1,462.07 after climbing 10.05 points Monday.

After the previous day’s gains, the TSE came under profit-taking pressure from the outset of Tuesday’s trading. It received no incentive from the U.S. market, which was closed Monday for a national holiday.

Investor sentiment was dampened after Greece and the European Union failed to reach an agreement on financial assistance to the debt-plagued country at a eurozone finance ministers meeting Monday, brokers said.

In the afternoon, the Nikkei average trimmed losses on the back of a stronger than expected 20-year Japanese government bond auction, as well as index futures-led purchases amid the yen’s weakening from morning levels, brokers said.

Expectations for exchange-traded fund buying by the Bank of Japan and hopes for stock purchases by pension funds also underpinned the market’s downside, brokers said.

Still, analysts agreed that the Nikkei is unlikely to climb far above 18,000 in the short term.

“Today, investors found it difficult to decide whether they should buy or sell amid a dearth of fresh incentives from overseas,” said Kenichi Hirano, market analyst at K Asset Co.

An official at a bank-affiliated brokerage firm said there is lingering caution about further strengthening of the yen against the euro after the eurozone finance ministers meeting.

Investors are also awaiting the results of the Bank of Japan’s two-day policy-setting meeting through Wednesday.

“It would be a surprise to the market if the BOJ decides to expand its risk asset purchases in terms of their size or the variety of assets. But I do not think the bank will make such a move,” Hirano said.

Winners outnumbered losers 1,111 to 620 in the first section, while 131 issues were unchanged.

Volume fell to 2.316 billion shares from Monday’s 2.466 billion.

The yen’s rise against the euro from the previous day’s levels triggered selling of Europe-linked names. Among them were camera-maker Canon and air conditioner manufacturer Daikin Industries.

Profit-taking hit bank groups, including Mitsubishi UFJ and Sumitomo Mitsui, as well as electronics maker Sony.

On the other hand, general contractors Kajima, Taisei and Obayashi were buoyant on the back of prevailing hopes for benefits from Prime Minister Shinzo Abe’s economic policies.

Also on the plus side were automaker Nissan, trading house Mitsubishi and brokerage Nomura.

In index futures trading on the Osaka Exchange, the key March contract on the Nikkei average climbed 10 points to end at 18,000.

Nikkei Futures

nikkeifutures.org@imediaone.com

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