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Nikkei dips, but poised for best month since March

Published 09/29/2010, 09:28 PM
Updated 09/29/2010, 09:32 PM

* Nikkei slips on day but poised for 8 pct rise in Sept

* Prospects of more easing, yen intervention help -analysts

* Despite slowdown, sharp economic erosion unlikely -analyst

By Aiko Hayashi

TOKYO, Sept 30 (Reuters) - Japan's Nikkei average is poised to book its best monthly performance in six months on Thursday, helped by expectations for further easing by the central bank and that the yen's rapid advance could be curbed by more intervention by the authorities.

The index inched down on the day, after Wall Street took a breather from a month-long rally, with investors nervously watching moves in the currency markets. In early Asia trade, the dollar traded at 83.73 yen, near its lowest level since Sept. 15, when Japan intervened.

"The big turning point in September was intervention. The move has helped to soothe fears about a further advance in the yen and put the stock market back on a recovery path," said Masayuki Otani, chief market analyst at Securities Japan, Inc.

"Neither the United States nor Japan has changed their stance towards easing policy, and that will likely support the market. The domestic economy is seen slowing from now on, but a sharp slowdown is unlikely and stock prices will likely move to factor that in in advance and build on gains."

The benchmark Nikkei fell 8.52 points to 9,550.86, on course to post a gain of about 8 percent for the month of September, which would be its biggest monthly rise since March.

The broader Topix fell 0.2 percent to 845.42.

Expectations grew that the Bank of Japan will discuss easing monetary policy further at a meeting next week after a poor December outlook in the central bank's "tankan" survey of business sentiment released on Wednesday.

SURPRISE FALL IN OUTPUT

Data on Thursday also showed Japan's industrial output unexpectedly fell 0.3 percent in August in a sign the economy's recovery is losing momentum due in part to a slowdown in export growth.

"The market will likely be solid going forward, although trade will probably be range-bound for a while as the economy has shown signs of a lull. That said, the possibility of more currency intervention will likely provide support," said Hiroichi Nishi, general manager of equity marketing at Nikko Cordial Securities.

Despite the monthly gain, persistent worries about the threat a strong yen poses to the fragile economic recovery kept the Nikkei's performance for the July-September quarter in check.

The Nikkei's rise of only about 2 percent during the period compares with a 17 percent gain in the MSCI index of Asia Pacific stocks outside Japan.

Resistance for the Nikkei stands around 9,600, the upper level of its daily Ichimoku cloud on the charts and a level that the index has tried repeatedly to pierce in recent sessions.

Support appears to lie around 9,400, the Nikkei's 13-week moving average.

Shares of Inpex Corp fell 1.7 percent to 401,000 yen after the Nikkei business daily reported that Japan's top oil explorer had decided to withdraw from the Azadegan oil field development project in Iran due to pressure from the U.S. government.

Inpex said it had not made a decision on the matter and a spokesman said the firm would consult the Japanese government to decide on its future in the project.

Nintendo tumbled 8.7 percent to 21,000 yen after its announcement of a late launch of its new 3D-capable DS handheld game player, as well as weak sales of existing products and a firm yen, forced it to slash its full-year profit forecast by one-third. (Editing by Edmund Klamann)

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