Nikkei at 3-wk closing low as yen regains strength

* Nikkei down as Shanghai shares dip on ebb in China’s growth

* Geithner remarks lift Nikkei but effect short-lived

By Chikafumi Hodo and Aiko Hayashi

TOKYO, Oct 21 (BestGrowthStock) – Japan’s Nikkei average inched down
to its lowest close in three weeks on Thursday, erasing early
gains after the yen regained strength against the dollar and
Shanghai shares drifted down.

The Nikkei had briefly risen in the morning as the yen
slipped after U.S. Treasury Secretary Tim Geithner said major
currencies were roughly in alignment, but the effect was
short-lived as the yen rebounded and dragged down Japanese
shares.

“Today’s moves showed how nervous investors were about the
yen’s strength,” said Yumi Nishimura, deputy general manager at
Daiwa Securities Capital Markets.

“Chinese economic data was roughly within expectations, and
few people expect the country will have another rate hike soon,
but Shanghai stocks are down and external factors are influencing
Japanese stocks,” Nishimura said.

The benchmark Nikkei (.N225: ) eased 5.12 points or 0.1 percent
to 9,376.48, its lowest close since Sept. 30.

The broader Topix (.TOPX: ) lost 0.4 percent to 820.40.

The Nikkei bounced more than 1 percent to a session high of
9,479.25 at one point in the morning session as the yen dropped
on Geithner’s comments.

Geithner, in an interview published by the Wall Street
Journal on Thursday, said major currencies were now roughly in
alignment. [ID:nSGE69K016]

The newspaper said the comments suggested he saw no need for
the dollar to sink more than it already had against the euro and
the yen.

The Nikkei initially jumped as stock market participants
thought the yen was being hammered down by currency intervention
by Japanese authorities, though the movement appeared to be
driven solely by Geithner’s comments, traders said.

Japanese shares then struggled as the yen started to regain
strength, they said.

The yen rose 0.1 percent to 81.01 (JPY=: ) against the dollar,
approaching a 15-year low of 80.84 yen hit in the previous
session. The Japanese currency fell as far as 81.84 against the
dollar after the comments by Geithner came out.

“It’s hard to explain why Japanese shares are underperforming
so much against others, but one key reason is the yen,” said
Masaru Hamasaki, a senior strategist at Toyota Asset Management.

“Many are speculating that Japanese firms won’t be able to
come up with strong earnings outlooks due to the yen’s strength,”
Hamasaki said.

The Nikkei was also undermined as Shanghai shares edged down
after Chinese data showed economic growth ebbing and inflation
edging higher. [ID:nTOE69K05J]

China said its economic growth slowed in the third quarter
but was a touch stronger than expected. Consumer inflation hit a
23-month high of 3.6 percent in September but was in line with
market expectations.

Shanghai’s key stock index (.SSEC: ) dropped 0.8 percent to
2,980.2 by late afternoon.

Currency factors are expected to drive the Nikkei, with
investors closely watching for talk on foreign exchange issues at
a Group of 20 meeting starting on Friday [ID:nTOE69K01G].

“Underlying sentiment is pretty weak as the Nikkei failed to
rise despite seeing a big rebound on Wall Street,” said Koichi
Ogawa, chief portfolio manager at Daiwa SB Investments.

“Japanese stocks simply lack major buyers … there are no
buyers standing out now. That’s the reason why the Nikkei comes
under downward pressure very easily, especially as the market has
been very thin lately,” Ogawa said.

Trade was moderate, with 1.78 billion shares changing hands
on the Tokyo exchange’s first section. Declining stocks
outnumbered advancers by more than 2 to 1.

Shares of Central Japan Railway Co (JR Tokai) (9022.T: )
tumbled to their lowest in nearly a year on Thursday, as
investors worried the firm may need to issue shares to finance
its 5 trillion yen ($61.6 billion) maglev train project.
[ID:TOE69K02A]

NTT Data Corp (9613.T: ) rose 1.5 percent to 250,600 yen after
the Nikkei business daily reported the IT services company will
buy U.S. firm Keane Inc for more than 100 billion yen ($1.2
billion) as it looks to make a major push into the world’s
biggest IT market. [ID:nSGE69J0LG]
(Editing by Michael Watson)

Nikkei at 3-wk closing low as yen regains strength