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Nikkei down 2.1 pct, tech and resource shares fall

Published 06/15/2009, 09:32 PM
Updated 06/15/2009, 09:48 PM
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* Tech shares decline on profit-taking

* Resource-linked shares down after fall in commodities

* Nikkei drops below five-day moving average

By Masayuki Kitano

TOKYO, June 16 (Reuters) - Japan's Nikkei average dropped 2.1 percent on Tuesday after weak U.S. regional manufacturing data dented optimism about the U.S. economy's health, with tech shares such as Tokyo Electron falling on profit-taking.

Resource-linked shares fell after commodity prices slid the previous day, with trading house Mitsubishi Corp losing 3.7 percent to 1,908 yen, and oil and gas explorer Inpex Corp shedding 3.2 percent to 768,000 yen.

Such selling helped push the Nikkei back below 10,000 and under its five-day moving average, which had lent the benchmark index support since late May.

"This move reflects strengthened concerns about a fall in risk tolerance," said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Securities, adding that the scope of the declines seen so far suggests that Tokyo shares are being dragged lower by profit-taking.

While the Nikkei may see a drop to around 9,600 this week, its downside is likely to be well-supported, Yamagishi said, adding that a re-emergence of extreme risk aversion seemed unlikely to occur.

The benchmark Nikkei average fell 2.1 percent or 207.06 points to 9,832.61, pulling further away from an eight-month closing high of 10,135.82 on Friday.

The broader Topix dropped 2.5 percent to 922.88.

U.S. stocks tumbled on Monday, marking their worst slide in a month, after the New York Fed's Empire State general business conditions index showed the factory sector shrank at a much more severe rate in June than the previous month.

The Reuters-Jefferies CRB index, a global commodities benchmark, fell 2 percent on Monday on a sell-off sparked by a stronger dollar and investors' worry that prices may have run ahead of fundamentals.

High-tech shares retreated, with Tokyo Electron falling 3 percent to 4,550 yen and Advantest falling 4.5 percent to 1,685 yen.

Consumer lenders Aiful Corp and Takefuji Corp slid after ratings agency Standard and Poor's on Monday cut its ratings on the long-term debt of the two firms to speculative, or junk status.

Aiful fell 6.6 percent to 353 yen and Takefuji dropped 8.6 percent to 571 yen. (Reporting by Masayuki Kitano; Editing by Chris Gallagher)

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