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Nikkei hits 8-wk low, political uncertainty weighs

Published 07/13/2009, 12:54 AM
Updated 07/13/2009, 12:56 AM
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* Nikkei falls, hurt by growing political uncertainty

* PM Aso set to call election on Aug. 30

* Kirin jumps on news Suntory considering merger with Kirin

TOKYO, July 13 (Reuters) - Japan's Nikkei average fell 2.1 percent to hit its lowest point in eight weeks on Monday, hurt by growing political uncertainty after news that embattled Prime Minister Taro Aso is set to call a general election for Aug. 30.

But Kirin Holdings Co jumped nearly 8 percent and other brewers rose after Suntory Holdings Ltd said it was considering a merger with Kirin, which would create one of the world's largest beverage and food firms.

Japan's embattled Prime Minister Taro Aso plans to call a general election on Aug. 30, a top ruling party official said on Monday, despite prospects that his long-ruling conservative party is headed for a big defeat.

A fall in other Asian markets and U.S. stock futures also helped Japan's benchmark to soften further, they said.

"The news may have prompted some investors to hold back buying on dips as they expect instability either way. It's hard to imagine a new stable administration that could spark hopes and push up the market," said Mitsushige Akino, chief fund manager at Ichiyoshi investment Management.

The benchmark Nikkei slid 2.1 percent or 193.12 points in thin trade to 9,094.16, its lowest level since May 18. It is on track for a nine-day slide.

The broader Topix fell 1.6 percent to 858.34.

Caution ahead of upcoming corporate earnings releases and the yen's resilience against the dollar also hurt some exporter shares.

Sony Corp shed 3.1 percent to 2,160 yen and electronics parts maker Kyocera Corp lost 2.8 percent to 6,600 yen.

Investors warily eyed the yen, which rose to a five-month high against the dollar below 91.80 yen on Friday. The currency retreated to near 93.00 yen early on Monday before drifting back to 92.50 yen.

Closely watched earnings releases this week include those of Goldman Sachs and Intel on Tuesday, JP Morgan Chase on Thursday and Bank of America on Friday. (Reporting by Aiko Hayashi; Editing by Edwina Gibbs)

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