Wednesday August 12, 02:25 AM
Nikkei retreats from 10-mth highs, eyes Fed
TOKYO, Aug 12 (Reuters) - Japan's Nikkei (news) average pulled back
from 10-month highs on Wednesday, as concerns over a U.S.
economic recovery grew after an unexpectedly large drop in
wholesale inventories and negative comments about the banking
sector from a prominent analyst.
Analysts said investors were locking in profits ahead of the
end of a Federal Reserve board meeting and issuance of its policy
statement, with attention on whether it unwinds some of the
quantitative easing policies currently in place.
Exporters such as Canon Inc fell but Sapporo
Holdings gained on a report it will buy 20 percent stake
in drinks maker Pokka Corporation (P59.SI - news) as part of a three-way tie-up
with Meiji Holdings.
'There's some concern that the Nikkei has been overbought,
and that put together with inability to read what the Fed might
do is leading to profit-taking,' said Takashi Ushio, head of the
investment strategy division at Marusan Securities.
The benchmark Nikkei shed 0.6 percent or 62.45 points
to 10,520.09 after rising to a 10-month high of 10,587.36 on
Tuesday, while the broader Topix fell 0.9 percent to
964.41.
'I wouldn't go so far yet as to call what's happening now an
adjustment, but for the Nikkei to rise past 11,000 we need to see
proof of quite a sharp recovery in earnings,' said Ushio (Berlin: UHO.BE - news) .
Japanese wholesale prices fell a record 8.5 percent in July
from a year earlier, highlighting growing deflationary pressure
in the economy and limiting the Bank of Japan's scope for ending
its unorthodox policy measures, but analysts said there was
little impact from this on the Nikkei.
Banks lost some ground. Their U.S. peers fell after Rochdale
Securities analyst Richard Bove painted a gloomy outlook for the
U.S. banking industry, saying he expected a short-term pull-back
in their stock prices and sending the S&P 500 financial sector down 3.5 percent.
Sumitomo Mitsui Financial Group, Japan's No. 3 bank,
lost 1.4 percent to 4,100 yen, Mitsubishi UFJ Financial Group lost 1 percent to 604 yen and Mizuho Financial Group shed 1.7 percent to 234 yen.
Canon (Berlin: CNN1.BE - news) slipped 0.9 percent to 3,450 yen, Sony Corp
fell 2 percent to 2,715 yen, and Honda Motor Co (Paris: JP3854600008 - news) lost 1.3
percent to 3,080 yen.
Sompo Japan Insurance shed 4.3 percent to 653 yen
after the non-life insurer on Tuesday announced a first quarter
net loss of 3.8 billion yen ($39.6 million), in contrast to
strong profits posted by other major nonlife insurers.
(Reporting by Elaine Lies; Editing by Edwina Gibbs)
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