Nikkei drops 3 pct, yen worry hits investor confidence

* May test low at 8,800, then 61.8 pct retracement at 8,697

* Individual investors likely bailing out -analyst

* Nikkei poised for worst monthly performance since May

* Worry about this week’s U.S. indicators weighs on market

TOKYO, Aug 31 (BestGrowthStock) – Tokyo stocks fell 3 percent on
Tuesday, their worst daily drop in three months, after the Bank
of Japan’s emergency moves the day before failed to curb the
yen’s strength and disheartened investors bailed out of the
market.

Market players noted disappointment after the BOJ expanded
its fund supply tool, widely seen as an ineffective move, while
the U.S. economic recovery was under a cloud, limiting how much
Japan alone could do for its economy and stock market.

“The market appears to be demanding more steps from Japanese
authorities after the BOJ measures were not strong enough to stop
the yen from advancing,” said Masayuki Otani, chief market
analyst at Securities Japan Inc.

“The next step would have to be intervention, though first we
may see one or two more verbal intervention attempts.

“Investors are also selling ahead of this week’s U.S.
economic indicators, including jobs data, because of worries that
if those data are poor, that’d also prompt selling of the dollar.
At this level, individual investors in particular are dumping
shares, along with foreigners.”

The benchmark Nikkei (.N225: ) shed 277.40 points to 8,871.86
and was poised to record its worst month since May, while the
broader Topix (.TOPX: ) lost 2.6 percent to 807.46.

The dollar slipped 0.4 percent against the yen to 84.25 yen
(JPY=: ), within sight of last week’s 15-year low of 83.58 yen.

U.S. stocks (Read more about the stock market today. ) fell in the year’s lightest volume on Monday as
worries about the pace of recovery overshadowed a rise in
consumer spending and incomes, with investors moving to the
sidelines ahead of this week’s data, including non-farm payrolls
data on Friday.

“Although the U.S. spending data yesterday wasn’t bad, it’s
the indicators out later this week that are the really important
ones, and predictions for these are really raising fears about
the economic recovery,” said Takashi Ushio, head of the
investment strategy division at Marusan Securities.

Some light buying by pension funds was likely and may offer
support at the lows, but market players said the Nikkei could
test the 8,800 level, around a 16-month low hit last week, at
some point this week.

Below 8,800, the next target is 8,697, a 61.8 percent
retracement of the Nikkei’s rally from its March 2009 low to its
April 2010 high.

Exporters took a beating. Canon Inc (7751.T: ) sank 3.9 percent
to 3,445 yen and Kyocera Corp (6971.T: ) shed 3 percent to 7,220
yen. Sony Corp (6758.T: ) lost 3.5 percent to 2,373 yen.
(Editing by Edmund Klamann)

Nikkei drops 3 pct, yen worry hits investor confidence