Nikkei slips from 3-wk highs on investor economy worry

* Nikkei pares losses after China data but falls again

* Slow stochastic turns bearish, suggests near-term dip

* Fed statement feeds investor jitters about slowing recovery

* Support below 9,700: level of 25-day MA, Ichimoku kijun-sen

* Little impact from BOJ, which revises up economic f’cast

By Aiko Hayashi and Elaine Lies

TOKYO, July 15 (BestGrowthStock) – Japan’s Nikkei average fell 1.1
percent on Thursday after the Federal Reserve’s caution on the
U.S. economic recovery and souring near-term technicals prompted
investors to take profits after a jump this month to three-week
highs.

Asian stock markets slightly pared falls after data showing
China’s annual economic growth eased to 10.3 percent in the
second quarter, but inflation at the producer and consumer level
also eased in June from May, reducing the need for further policy
tightening. [ID:nTOE66D06L] [ID:nTOE66D060]

The figures were announced just after the benchmark Nikkei
ended morning trade, and saw S&P futures (SPc1: ) turn positive.

“The Nikkei is now stuck in a place where it’s hard to go
either significantly higher or lower. Investors are trying to
understand if signs of a slowdown in U.S. economic data show the
recovery is in a lull, or if it’ll continue at a slow pace,” said
Junichi Misawa, a senior fund manager at STB Asset Management.

He also said the China data initially helped the stock market
trim earlier losses, but investors seem to lack a consensus on
how to interpret it.

“Stock markets trimmed losses after the China data but they
are under pressure again. That shows how fluid the markets’ views
still are on China. If the data was too strong it would spark
concerns and if it was too weak it could lead to worries about a
slowdown,” Misawa said.

In light trade, the benchmark Nikkei shed 109.71 points to
9,685.53, after falling as low as 9,667.00 at one stage. On
Wednesday, the index rose nearly 3 percent to its highest close
since late June.

The broader Topix (.TOPX: ) lost 1.6 percent to 856.60 on
Thursday.

Market players said the Nikkei was slightly overstretched
going into the day and it was no surprise it was taking a bit of
a breather.

Minutes of the Fed’s June meeting showed policy-makers felt
they should be ready to consider additional steps to boost the
U.S. economy if an already softening outlook worsens, adding to
worries stoked by a report showing June retail sales fell more
than expected. [ID:nN14148574] [ID:nN14122226]

“A lot of investors are quite sensitive to anything the
Federal Reserve says, and that kind of statement has chilled the
recent rapid growth of market optimism,” said Nagayuki Yamagishi,
a strategist at Mitsubishi UFJ Morgan Stanley Securities.

News from Japan’s central bank had little impact on the
market. The Bank of Japan revised up its economic forecast for
the current fiscal year but reiterated that it will keep monetary
policy easy, with deflation likely to persist at least until
early 2011. [ID:nTKU106138]

The Nikkei hovered just above support provided by its 25-day
moving average, currently at 9,680, and additional support on its
daily Ichimoku charts at around 9,670, which was its kijun-sen.

The kijun-sen is an indicator of medium-term trends that can
be either support or resistance but is currently pointing
sideways, while Ichimoku charts are popular with Japanese
traders.

But other momentum indicators are mixed, with the Nikkei’s
slow stochastic — a measure of how oversold the market is and
whether it is in a short-term up or down trend — falling to just
below overbought territory, indicating a near-term dip is likely
to be in store. Yet its MACD continues to rise after a bullish
cross.

Resistance for the Nikkei stood near 9,760, a level where a
downward trendline, drawn from the April 27 and June 21 peaks,
comes in.

Trade was light on the Tokyo exchange’s first section, with
1.5 billion shares changing hands, the lowest volume in more than
a week.

Declining stocks outnumbered advancing ones by nearly 8 to 1.

CARS, EXPORTERS, TECH

Automakers lost ground after helping boost the broader market
on Wednesday, when shares of Japan’s top three automakers all
jumped about 4 percent.

Shares of Nissan Motor Co (7201.T: ), Japan’s No.3 automaker,
slid 3.3 percent to 648 yen after it said it would idle two U.S.
assembly plants for three days starting on Thursday because of a
shortage of electronic control units from Hitachi Ltd (6501.T: ).
[ID:nN14156554]

Nissan said earlier this week it would halt part of its
vehicle production in Japan for three days starting on Wednesday
after Hitachi said delivery of engine control units was running
behind schedule. [ID:nTOE66C052]

Top automaker Toyota Motor Corp (7203.T: ) slid 2.3 percent to
3,175 yen and Honda Motor Co (7267.T: ), the No.2, retreated 2.2
percent to 2,682 yen.

Techs and exporters, some of the main impetus behind the
Nikkei’s climb on Wednesday, fell broadly as well, with gains by
the yen adding weight.

Oki Electric Industry (6703.T: ) lost 5.2 percent to 73 yen
after Goldman Sachs downgraded it to “sell”, citing a possible
undershooting of guidance for the business year ending next
March.

Takeda Pharmaceutical (4502.T: ) fell 1.4 percent to 3,965 yen
as a rival to Takeda’s flagship diabetes drug won support from a
U.S. panel of health advisers. The panel said GlaxoSmithKline
Plc’s (GSK.L: ) diabetes drug Avandia should be allowed to stay on
the market. [ID:nN14274445]
(Editing by Michael Watson)

Nikkei slips from 3-wk highs on investor economy worry