Nikkei slips after rally, more resistance seen

* Nikkei holds above 25-day MA but more resistance on horizon

* Nikkei hurt by profit-taking after four days of gains

* Yen strength drags but U.S. economy worry receding-analyst

* Wall Street’s reaction to Obama’s economy plan eyed

By Aiko Hayashi and Shinichi Saoshiro

TOKYO, Sept 7 (BestGrowthStock) – Japan’s Nikkei average fell 0.8
percent on Tuesday, dented by profit-taking after four days of
hefty gains and as the yen’s strength shows little sign of
abating.

For a second straight day the benchmark managed to hold above
its 25-day moving average, which had served as resistance for
most of last month, but it struggled to convincingly snap its
downward trend, with further resistance lying ahead on technical
charts.

Market players were also keen to see how Wall Street reacts
after U.S. President Barack Obama proposed to rebuild U.S.
infrastructure with an initial $50 billion investment and
prepared new business tax cuts. U.S. stock futures (SPc1: ) were
down 0.3 percent after markets were closed on Monday for Labor
Day. [ID:nN06186655]

“The yen’s strength hasn’t gone away, and there’s really no
reason to buy Japanese stocks at this point. The Bank of Japan is
out of cards and it’s about time the government took charge, but
its focus appears to be on (the ruling Democratic Party’s)
leadership election on Sept. 14,” said Kazutaka Oshima, president
of Rakuten Investment Management.

“But extreme pessimism about the U.S. economy has receded,
and the news about Obama’s plan is an additional positive factor
that could push up U.S. stocks (Read more about the stock market today. ) and yields.”

The Nikkei (.N225: ) ended the day down 75.32 points at
9,226.00. Its 25-day moving average, currently around 9,210, is
considered a proxy for a one-month moving average and is closely
watched in Japan.

The Nikkei has recovered about 5 percent this month following
a 7.5 percent slide in August but remains one of the
worst-performing major world stock markets this year, hurt by
worries about the impact of the yen’s strength on corporate
earnings and the fragile economic recovery.

The broader Topix (.TOPX: ) fell 0.5 percent to 834.92.

The impact was muted from the Bank of Japan’s decision to
keep monetary policy unchanged. After easing policy just last
week, the central bank kept interest rates on hold at 0.1 percent
as widely expected. [ID:nTOE68602K]

At a post-meeting news conference, Governor Masaaki Shirakawa
said the central bank would carefully watch the yen’s impact on
Japan’s economy, but said it was wrong to judge the success of
its policy actions based on short-term market moves alone.
[ID:nTKU106243]

The dollar traded at 83.85 yen (JPY=: ), within sight of a
15-year low of 83.58 yen hit on electronic trading platform EBS
late last month. [FRX/]

After the 25-day moving average, the Nikkei’s next downward
target is seen at 9,126, around its five-day moving average, and
then at 9,053, its “tenkan sen” on daily Ichimoku charts, an
indicator of short-term trends. Ichimoku charts are popular with
Japanese traders.

The Nikkei’s resistance lies at 9,408, its 13-week moving
average, and around 9,460, where the bottom of its Ichimoku cloud
lies.

NIKKEI JOINERS JUMP

Shares of Tokyo Tatemono Co Ltd (8804.T: ) and Nippon Electric
Glass Co Ltd (5214.T: ) climbed after the publisher of the Nikkei
225 said on Monday it would add the two stocks as new components
of the index in the coming weeks. [ID:nTOE68506G]

Tokyo Tatemono jumped 3.2 percent to 319 yen and Nippon
Electric Glass added 1.4 percent to 1,080 yen. Clarion Co Ltd
(6796.T: ), which will be removed on Oct. 1, lost 9.3 percent to
157 yen.

Shares of exporters lost ground after having led gains the
previous day, with Advantest Corp (6857.T: ) shedding 1.8 percent
to 1,655 yen.

Rollingstock manufacturers and transport equipment makers
gained following the Obama stimulus proposal involving $50
billion in initial investment, including a plan to lay and
maintain 6,400 km (3,980 miles) of railway in the United States.

Shares of Nippon Sharyo (7102.T: ), a major rollingstock maker,
gained 4.1 percent to 407 yen, while peer Kinki Sharyo (7122.T: )
rose 3.1 percent to 396 yen.

Some 1.59 billion shares changed hands on the Tokyo
exchange’s first section, the highest volume in about a week.

Declining shares outnumbered advancing ones by more than 2 to
1.
(Editing by Chris Gallagher)

Nikkei slips after rally, more resistance seen