Nikkei retreats from 3-month high

Tue, Aug 21, 2012, 01:00

Japan's Nikkei share average retreated from a three-month high today on creeping doubts over the European Central Bank's plan to tackle the region's debt crisis, although investors buying defensive stocks offered some support to the market.

Expectations that the ECB would take bold action to tackle the euro zone sovereign debt crisis have helped the Nikkei rebound 10 per cent from a seven-week low touched on July 25th. The Nikkei is up 8.3 per cent so far this year.

But the market is still awaiting further details of the ECB's plans, and the central bank on Monday quashed speculation about the form of its bond-buying programme, while there are signs of fatigue after the Nikkei's sharp run-up.

The Nikkei slipped 0.2 per cent to 9,156.92 but held above its 26-week moving average at 9,149.50. The benchmark edged up 0.1 per cent yesterday, hitting a three-month closing high for a second session in a row.

Nippon Telegraph and Telephone advanced 0.6 per cent, while mobile operators Softbank and KDDI gained 1.4 and 0.9 per cent, respectively.

Convenience store operators Seven & I Holdings, Lawson and FamilyMart were up between 1 per cent and 1.5 per cent. But Japan Tobacco Inc dropped 1.7 per cent after the Wall Street

Journal said in its online edition that the European Union is investigating whether a sale of cigarettes by a Swiss-based unit of Japan Tobacco to a firm liked to cousins of Syrian president violated its sanction against Syria.

The broader Topix added 0.1 percent to 765.26 in light trade, with 1.23 billion shares changing hands, the second lowest level this year.

The market's recent rebound has further lifted the Topix's 12-month forward price-to-book ratio to 0.85, from a four-year low of 0.8 hit in the first week of August, data from Thomson Reuters Datastream showed. That compares with the US S&P 500's 1.9 and the STOXX Europe 600's 1.36.

Sharp rose 2.9 per cent and was the most- traded stock on the main board by turnover after the Yomiuri newspaper said the embattled TV maker aims to cut 8,000 jobs or 15 per cent of its global workforce.

Short-selling in Sharp increased, with 92.21 per cent of its stock that is available to be borrowed out on loan as of August 17th, up from 92.15 per cent on August 16th, according to data provider Markit.

Economy-sensitive shippers were down 1.7 per cent as the worst sectoral performers, while traders said a downgrade by SMBC Nikko Securities weighed on construction machinery maker Komatsu, which lost 2.8 per cent.

Reuters