Nikkei slips as market searches for cues

By Elaine Lies

TOKYO (BestGrowthStock) – Japan’s Nikkei average slipped 0.6 percent on Tuesday, with an erroneous transaction dragging down the market in thin trade as investors looked for signs markets are settling down after stocks took a mauling last month.

Signs of a slowing economy in China hit companies with ties there, such as construction machinery maker Komatsu, while political uncertainty also weighed on the market as calls emerged within Japan’s ruling party for Prime Minister Yukio Hatoyama to resign.

Hatoyama said on Tuesday he would stay on as leader, despite pressure from within his own party to resign as his approval ratings sink ahead of an election expected next month.

The benchmark Nikkei hit a session low of 9,658.44 in early trade amid talk of a big erroneous sell order that was placed briefly in futures before being pulled back, with some in the market noting the impact was exaggerated due to the overall lightness of trade.

Deutsche Securities said later the erroneous order had been placed due to an in-house computer system problem and was soon reversed.

Analysts said investors were taking a breather after the mauling sustained by global stocks in May. The Nikkei fell nearly 12 percent for its worst monthly performance since October 2008.

“The market is healing its wounds,” said Koichi Ogawa, chief portfolio manager for Daiwa SB Investments.

“It’s starting to appear that economic recovery may have peaked in April so it’ll be pretty hard for the market to rise, but given the steepness of the May fall a short-term technical rebound is possible.”

The benchmark Nikkei shed 56.87 points to 9,711.83, snapping a four-day run of gains, while the broader Topix edged down 0.1 percent to 880.04.

“The yen’s gains against the euro are weighing on the market. The New York market was closed yesterday and European markets were quiet, so the euro is the main driver for the time being,” said Toshiyuki Kanayama, a market analyst at Monex Securities.

“The latest political situation is weighing on the market slightly as well, but the impact is limited, as politics seldom has a direct impact on Japan’s stock market,” he said.

Some 1.6 billion shares changed hands on the Tokyo exchange’s first section, the lowest since early March. Declining shares outnumbered advancing ones by 820 to 701.

Market players said buying was likely at lows by retail investors and possibly pension funds, while foreign investors had been selling for the last week, albeit lightly on some days.

“There may be some rebalancing going on after the weighting of stocks grew too low,” said Daiwa SB Investment’s Ogawa.

SLIGHT YEN ADVANCE, CHINA

The yen advanced on the euro and dollar, setting off light selling of exporters.

The euro slipped 0.1 percent to 112.06 yen after it hit a 8- year low below 109 yen the previous week. The dollar was flat at 91.25..

Toyota lost 0.5 percent to 3,265 yen and Sony Corp slipped 1 percent to 2,788 yen. Kyocera shed 1 percent to 7,850 yen.

Shares in firms with ties to China slipped after the pace of factory output in the world’s third-largest economy eased last month as gradual policy tightening took a toll on new orders, with the purchasing managers’ index (PMI) issued by the China Federation of Logistics and Purchasing eased to 53.9 in May from 55.7 in April.

Hitachi Construction shed 1.8 percent to 1,825 yen and Komatsu, the world’s second-largest maker of earth-moving machinery, fell 1.5 percent to 1,684 yen. Kawasaki Kisen lost 3.2 percent to 358 yen.

Hitachi, Japan’s largest electronics marker, fell 3.5 percent to 359 yen one day after announcing a business strategy plan.

The Financial Times quoted Hitachi President Hiroaki Nakanishi as saying in an interview that European debt woes were having an impact on business and that some contracts had been delayed and there may be cancellations.

But a Hitachi spokesman said that while some projects were experiencing delays, the company was not expecting any to be canceled or a big impact on overall earnings.

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(Additional reporting by Daiki Iga and Shinichi Saoshiro; Editing by Michael Watson)

Nikkei slips as market searches for cues