Nikkei rises as machinery data offsets Wall Street losses

* Better-than-expected machinery data helps the mood * “Side effects” from weak yen starting to be seen – analyst By Ayai Tomisawa TOKYO, March 11 (Reuters) – Japan’s Nikkei share average rose on Wednesday, with better-than-expected machinery orders offsetting the downdraft from weaker U.S. markets, which fell on growing views that the Federal Reserve may raise rates as soon as June.

The Nikkei was up 0.5 percent at 18,754.67 points by mid-morning after traversing positive and negative territories.

Last Friday’s stronger-than-expected U.S. jobs data has raised expectations for an early U.S. rate hike. As a result, the S&P 500 posted its biggest decline in two months overnight, while the worries pushed the dollar to a nearly eight-year high of 122.04 yen t.

Analysts said that although a weak yen generally lifts Japanese exporters’ profits made overseas, a steep drop in the yen stokes concerns that it would drive up import costs.

“The market started to worry about side effects from a further slide in the yen,” said Hiroichi Nishi, general manager at SMBC Nikko Securities, adding that there are also concerns that a stronger dollar hurts U.S. multinational companies’ earnings.

On the other hand, hopes for Japan’s economic recovery supported the mood.

Core machinery orders fell 1.7 percent in January, but the decrease was smaller than a median market forecast for a 4.1 percent drop, offering some hope on the outlook for capital expenditure.

“This outcome was good, especially because it was after sentiment was dented by a weak revised GDP data earlier this week,” said Isao Kubo, equity strategist at Nissay Asset Management.

On Monday, data showed Japan’s economy grew less than initially reported in the fourth quarter as capital expenditure declined, in a worrying sign that a rebound in consumer spending is not encouraging business investment.

Exporters were mixed, with Toyota Motor Corp falling 0.1 percent, Honda Motor Co dropping 0.6 percent and Canon Inc gaining 0.2 percent.

Domestic-demand sensitive stocks such as food companies and real estate shares attracted buying. Ajinomoto Co rose 2.8 percent and Mitsui Fudosan Co gained 1.1 percent.

The broader Topix gained 0.3 percent to 1,528.76 and the JPX-Nikkei Index 400 added 0.3 percent to 13,894.50.

(Editing by Kim Coghill)

Nikkei Futures

nikkeifutures.org@imediaone.com

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