Nikkei drops 2.6 pct on European debt worries

* Nikkei falls below 25-day MA around 11,100

* Exporters hit on fears Greek credit problems could spread

* Hopes for Japan earnings season provide support -analyst

* Toray rises on plan to make carbon fibre car parts

* Nikkei support seen around 10,800 -analysts

By Aiko Hayashi

TOKYO, April 28 (BestGrowthStock) – Japan’s Nikkei average slid 2.6
percent on Wednesday, dragged down by exporters such as Canon Inc
(7751.T: ) after downgrades of Greece and Portugal’s credit ratings
sparked fears the euro zone’s debt problems were spreading.

The Nikkei fell below its 25-day moving average, now around
11,100, and was set to book its biggest daily percentage fall in
nearly three months, but analysts expect the benchmark index will
find near-term support at 10,800.

Rating agency Standard and Poor’s slashed Greet debt to junk
status on Tuesday and also downgraded Portugal, fuelling concerns
about euro zone economic stability and sending European and U.S.
stocks sharply lower. [ID:nLDE63P0LU]

“Investors now fear that credit woes which started in Greece
could slow down the whole European economy,” said Masayoshi Yano,
a senior market analyst at Meiwa Securities.

The benchmark Nikkei (.N225: ) dropped 287.51 points to
10,925.15, after falling as low as 10,882.40 at one stage. The
broader Topix (.TOPX: ) fell 2 percent to 977.42.

Market players expect the Nikkei to find near-term support at
10,800, roughly a 38.2 percent retracement of a two-month rally
that started in early February and pushed it up to an 18-month
peak of 11,408.17 in early April.

The index’s relative strength index has also fallen below 50
after rising to a high of 76 earlier this month. Anything from 70
and above is considered overbought while 30 or below is seen

“There are investors who are willing to pick up stocks at
lows because of high expectations for domestic corporate
earnings. Japan’s earnings season won’t even hit its peak until
after the long weekend,” said Fumiyuki Nakanishi, investment
information manager at SMBC Friend Securities.

U.S. shares also posted their worst day in nearly three
months on Tuesday following downgrades of Greece and Portugal,
and as a grilling of Goldman Sachs on Capitol Hill heightened the
possibility of financial reform. [.N]

“Greece’s problems are unlikely to have negative impact on
the global economy, in my opinion, given the size of its GDP. The
issue has been used as an excuse to sell stocks — you need to
remember there are other concerns such as U.S. financial
regulation and Goldman Sachs,” said Nakanishi.


Canon Inc lost 2.6 percent to 4,270 yen and Kyocera Corp
(6971.T: ) shed 2.7 percent to 9,400 yen. Honda Motor (7267.T: ) fell
1.8 percent to 3,275 yen.

Investors took profits on shares like industrial robot maker
Fanuc Ltd (6954.T: ) which had rallied on better-than-expected
profits or earnings guidance.

Fanuc dropped 5.1 percent to 11,080 yen to become the most
actively traded stock by turnover on the main board, while copier
and printer maker Konica Minolta Holding (4902.T: ) gave up 4.1
percent to 1,203 yen.

Mazda Motor Corp (7261.T: ), Japan’s No.5 automaker, fell 3.6
percent to 271 yen after its earnings forecast fell short of
market expectations. [ID:nTOE63Q07J]

But Sumitomo Heavy Industries (6302.T: ) climbed 2.1 percent to
620 yen after the shipbuilder raised its operating profit
estimate for the past financial year about 47 percent, citing
robust demand from China and cost cuts.

Toray Industries (3402.T: ) rose 1.3 percent to 551 yen after
the textile maker said it and German carmaker Daimler AG
(DAIGn.DE: ) will jointly develop carbon fibre car parts.

Stock Investing

(Additional reporting by Rika Otsuka; Editing by Edwina Gibbs)

Nikkei drops 2.6 pct on European debt worries