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Nikkei dips 1.5 pct to 6-wk low as yen advances

Published 10/28/2010, 09:24 PM
Updated 10/28/2010, 09:28 PM

* Nikkei slips to 6-wk low, Sharp and Nintendo weighed by yen

* Nikkei dips below 9,300 for first time since Sept 15

* Market edgy before slew of earnings including Honda, Sony

TOKYO, Oct 29 (Reuters) - Japan's Nikkei average fell 1.5 percent to reach its lowest in more than six weeks on Friday as the yen's advance against the dollar weighed on shares of companies like Nintendo and Sharp.

Investors were keen to lighten long positions ahead of the weekend and before a blizzard of earnings reports due after the close on Friday and a highly anticipated Federal Reserve policy-setting meeting on Nov. 2-3.

"The Nikkei came under strong selling pressure as the yen's rise was picking up momentum," said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Morgan Stanley Securities.

"Investors wanted to keep their positions light ahead of next week's FOMC meeting as dollar/yen could turn volatile."

The benchmark Nikkei fell 1.5 percent or 137.16 points to 9,228.38 by mid-morning, while the broader Topix lost 1 percent to 806.50.

The yen advanced 0.2 percent to 80.83 to the dollar, coming closer to a 15-year high of 80.41 yen reached earlier in the week and a postwar historic high of 79.75 yen marked in April 1995.

Technical sentiment towards the Nikkei faltered as it dropped below the closely watched support of 9,300 for the first time since Sept. 15, traders said.

Yamagishi said the Nikkei could now test 9,200 in the near term, with 9,000 seen as the next target. The Nikkei last broke below 9,000 on Sept. 8.

Still, investors will be cautious about selling too aggressively head of a slew of results scheduled after the close that include Sony Corp, Honda Motor, Panasonic and Nomura Holdings.

Shares of Nintendo slid 2.7 percent to 20,720 yen after its quarterly profit halved, hit by a strong yen and slowing sales of game machines, underscoring a steady decline in earnings that some analysts warn could stretch well into next year.

Sharp shares lost 5.8 percent to 795 yen after the electronics maker lowered its full-year earnings forecast closer to market expectations and reported that its quarterly profit fell 24 percent, hurt by sluggish demand for liquid crystal display panels and a stronger yen.

In contrast, Sumitomo Mitsui Financial Group climbed 0.3 percent after the bank said on Thursday its first-half profit would be more than double a previous forecast. (Reporting by Chikafumi Hodo; Editing by Michael Watson)

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