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Nikkei hits 6-wk low as yen, recovery worries weigh

Published 07/09/2009, 01:08 AM
Updated 07/09/2009, 01:24 AM
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* Stocks hurt after yen hits 5-month high versus dollar

* Energy-linked stocks fall on oil's recent weakness

* Nikkei's 200-day MA looks to be forming support - analysts

TOKYO, July 9 (Reuters) - Japan's Nikkei average hit its lowest point in six weeks on Thursday, weighed down by exporters such as Canon as the yen stays near five-month highs against the dollar amid growing doubts about a speedy recovery in the global economy.

Energy-linked shares fell after oil prices dropped more than 4 percent on Wednesday on bearish oil data that outlined continued weak demand amid growing concerns about the economic recovery.

In a six-day losing streak through Wednesday, the benchmark Nikkei shed 5.4 percent, though it remains more than 30 percent above its lows hit in March.

Market players said the 200-day moving average of around 8,800 appears to be forming a support level for the benchmark for now, compared with the Nikkei's current level around 9,300.

"Over-optimism about an economic recovery is being modified to neutral. The market has started examining the situation more calmly, though it hasn't turned pessimistic yet," said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.

"Considering the rally in global stock markets since March, what we are seeing is still within a correction as there are no further reasons to keep buying now."

Akino said risk-money that recently buoyed oil and other commodities is now pouring into the safety of bonds as investors mull their next move.

At one point on Thursday, the benchmark 10-year yield fell as low as 1.270 percent, its lowest since March 25. Yields move inversely to prices.

The benchmark Nikkei was down 1.1 percent or 104.13 points at 9,316.62 in midafternoon trade, after earlier hitting 9,303.95, its lowest level since May 26. Investors took some comfort in the dollar's rebound above 93 yen on Thursday after it slid to a five-month low around 91.8 yen the previous day.

The broader Topix declined 1.5 percent to 875.19.

YEN, DOUBTS ABOUT ECONOMIC RECOVERY WEIGH

Exporters fell as investors fret over a stronger yen, which eats into their profits' when they are repatriated.

Camera and office equipment maker Canon shed 1.8 percent to 2,930 yen and Toyota Motor Corp slipped 1.4 percent to 3,420 yen. Honda Motor Co dropped 2.9 percent to 2,320 yen.

But Mitsubishi Motors Corp gained 1.2 percent to 163 yen after a newspaper said it and French carmaker Peugeot Citroen will work together to develop and produce parts for plug-in hybrid vehicles.

Oil refiner and distributor Cosmo Oil Corp declined 1.8 percent to 281 yen and Nippon Oil Corp, Japan's largest oil distributor, fell 1.4 percent to 486 yen. Oil and gas field developer Japan Petroleum Exploration lost 3.4 percent to 4,530 yen.

Shares of Clarion Co, a maker of car audio equipment, sank 4.5 percent to 85 yen after the Nikkei business daily said the company is expected to post an operating loss of about 2 billion yen for the April-June quarter due to sluggish domestic sales of automotive electronics.

But shippers advanced after Nikko Citigroup lifted its rating on Mitsui O.S.K. Lines to "1M" from "2M", saying the stock looks undervalued, and upgraded Nippon Yusen KK to "2M" from "3M", saying it now looks appropriately valued.

Mitsui O.S.K. climbed 1.4 percent to 563 yen and Nippon Yusen rose 0.3 percent to 395 yen. Kawasaki Kisen Kaisha gained 1.1 percent to 366 yen. (Reporting by Aiko Hayashi; Editing by Chris Gallagher)

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