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Nikkei falls 0.38 pct on fresh stimulus concerns, strong yen
Date: 2010/8/19 Click: 931
Tokyo stocks retreated Tuesday with Japan's key Nikkei stock index losing 0.38 percent on concerns that the nation's economy may need a fresh injection of stimulus and the yen's continued strength against the dollar weighed on investor sentiment.

The 225-issue Nikkei Stock Average fell 34.99 points, or 0.38 percent, from Monday to 9,161.68, the lowest closing since Nov. 27 when it finished at 9,081.52, while the broader Topix index of all First Section issues on the Tokyo Stock Exchange was down 1.85 points, or 0.22 percent, at 826.78.

Stocks struggled to move out of negative territory, weighed down by a robust yen versus the U.S. dollar with the dollar was trading in the lower 85 yen zone compared with the upper 85 yen range late Monday.

Exporters in particular, reliant on profits from abroad, see yields eroded when repatriated into the domestic currency. A number of Japanese companies have set their dollar/yen rate assumptions at 90 yen for the year to next March.

"The Japanese government's considering economic stimulus measures, which means that they're admitting the economy is weak," said Fumiyuki Nakanishi, a strategist at SMBC Friend Securities Co.

"It's not a good environment to buy stocks."

"Economic momentum is weaker than expected, so the market lacks positive factors for stocks other than valuations," added another local broker.

Japan's economy expanded at an annualized 0.4 percent pace in the three months ended June 30, the Cabinet Office reported yesterday -- far less than economists' expectations.

Prime Minister Naoto Kan is scheduled to have high-level discussions with Finance Minister Yoshihiko Noda and two other ministers to examine the economic situation and report back with proposals, regarding the strengthening yen, Europe's debt crisis as well as China's measures to cool its property market.

Slowing economic growth in the U.S. continues to dent investor confidence, brokers said.

As such, currency-sensitive issues retreated with Tokyo Electron falling 1.7 percent to 4,135 yen and Olympus Corp. slipping 2.0 percent to 2,166 yen.

TDK Corp., maker of electronic components, relinquished more than 1 percent to 4,490 yen and Toyota Motor was down half a percent to 3,005 yen.

Glass makers fell with Nippon Electric Glass slumping 3. 7percent to 963 yen and Asahi Glass losing 1.1 percent to 830 yen after Citigroup downgraded both stocks to "buy" from "hold" and slashed their target prices, citing difficulties they may face in adjusting their inventories for liquid crystal display panels on an anticipated slowdown in demand.

Real estate and developer issues faired better however with Mitsui Fudosan closing up 2.5 percent at 1,381 yen and Sumitomo Realty & Development climbing 2.4 percent to 1,640 yen.

Tokyo Electric Power Co., was notable gainer on today's market advancing 1.7 percent to 2,460 yen, as Mizuho reissued its " outperform" rating, saying the shares are relatively cheap given the prospects of improved operating rates at nuclear-power plants.

In light trade due to the Obon holiday period, some 1.29 billion shares changed hands on the Tokyo exchange's First section, down from Monday's volume of around 1.32 billion, with declining issues outnumber gaining ones by 846 to 647.
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