Nikkei falls over 2 pct, worry over policy weighs

* Market awaits Kan-Shirakawa meeting next week

* Govt stance on yen key for stock market – analysts

TOKYO, Aug 20 (BestGrowthStock) – Japan’s Nikkei average fell over 2
percent on Friday, extending losses set off by weak U.S.
economic data that sent the dollar slipping back towards a
15-year low, as worries deepened about what steps the Japanese
government might take to stem the recent yen rise.

Markets are rife with speculation that the Bank of Japan, in
an attempt to pre-empt government pressure for action, may
loosen its already-easy monetary policy at an emergency meeting
before or shortly after a meeting expected on Monday between
Governor Masaaki Shirakawa and Prime Minister Naoto Kan.

But market players said that expectations of a policy easing
were fading a bit as the afternoon wore on, prompting nervous
investors to dump shares ahead of the weekend.

“There have been a lot of market rumours out there about
what might happen, and now that it looks as if nothing will
happen today, a lot of people are getting rid of stocks,” said
Masayoshi Okamoto, head of dealing at Jujiya Securities.

“As for any meeting next week, if nothing comes out in terms
of policy, the market could fall pretty sharply.”

The benchmark Nikkei (.N225: ) pared losses slightly, dropping
1.7 percent or 162.69 points to 9,199.99, while the broader
Topix (.TOPX: ) shed 1.6 percent to 830.65.

“The major focus in the market is on the Shirakawa-Kan
meeting. If no positive news comes out of that, the yen will
probably strengthen further and that will weigh on the Nikkei,”
said Koichi Nosaka, a market analyst at Securities Japan, Inc.

“Although the chances of currency intervention by Japan may
be low, the market at least wants to see the country’s strong
resolve to protect its interests regarding its currency.”

The Nikkei was weak from early trade after Wall Street fell
on discouraging U.S. economic data.

New U.S. claims for first-time jobless benefits scaled a
nine-month high last week, while the Federal Reserve Bank of
Philadelphia reported an unexpected contraction in manufacturing
in the Mid-Atlantic region. [ID:nN19350083]

Canon Inc (7751.T: ) and other exporters slipped as the yen
advanced against the dollar, after the weak U.S. data.

Canon fell 1.9 percent to 3,610 yen and Kyocera Corp
(6971.T: ) shed 2.7 percent to 7,580 yen.

Sharp (6753.T: ) fell 2.6 percent to 854 yen after the Nikkei
business daily said the firm would reduce LCD panel production
for up to two months starting this month, adjusting supplies as
TV inventories pile up in the United States and China.
(Reporting by Elaine Lies; Editing by Joseph Radford)

Nikkei falls over 2 pct, worry over policy weighs