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Nikkei eases on yen rise but BOJ effect lingers

Published 10/06/2010, 09:43 PM
Updated 10/06/2010, 09:44 PM

* Nikkei weighed by yen, but effect of BOJ stays

* Real estate, financials strong after BOJ

* Key chart point seen at 9,704, high hit on Sept 21

By Chikafumi Hodo

TOKYO, Oct 7 (Reuters) - Japan's Nikkei average fell 0.2 percent on Thursday as the yen's rise to a fresh 15-year high undermined sentiment, but it continued to see inflows into the real estate and financial sectors in the wake of Bank of Japan easing.

The Nikkei was put under pressure as electronics slumped after U.S. tech shares dropped the previous day hit by worries about demand for semiconductors and data storage.

Weaker-than-expected third-quarter earnings guidance for South Korea's Samsung Electronics also added bearishness to the sector, traders said.

"The yen's rise, falls in U.S. tech shares and a weaker-than-consensus results by Samsung weighed on the Nikkei, but sentiment is not all that weak," said Hiroaki Osakabe, a fund manager at Chibagin Asset Management.

"The effect of the BOJ easing is still in place as we are seeing inflows into the property, construction and financial sectors. I believe this trend will continue for a while."

The benchmark Nikkei fell 16.41 points to 9,675.02, while the broader Topix rose 0.3 percent to 847.39.

The Nikkei average gained more than 3 percent over the last two sessions after the BOJ pledged on Tuesday that it would pump more funds into the struggling economy and to keep rates virtually at zero.

Shares of the real estate sector stayed strong after the BOJ announced a plan to set up a 5 trillion yen ($60 billion) fund to buy a wide range of assets including Japanese real estate investment trust (J-REITs).

Mitsubishi Estate rose 2.4 percent to 1,511 yen, adding to gains of more than 4 percent made on Wednesday, and Sumitomo Realty & Development climbed 2.7 percent to 1,890 yen, after jumping about 5 percent the previous day.

The real estate subindex was up 2.5 percent.

Financials have also performed strongly since the BOJ rate cut, with the banking subindex rising 1.7 percent and securities climbing 1.8 percent.

The market was closely watching moves in the yen, which jumped to a new 15-year high against the dollar the previous day on expectations the Federal Reserve will ease monetary policy to jump start a slumping U.S. economy.

The dollar was little changed at 82.94 yen after dipping to a 15-year low of 82.75 yen.

The level was below 82.87 yen where the BOJ moved to intervene on September 15.

The technical trend for the Nikkei looked strong after clearly breaking through key levels, including 9,530 the upper end of closely watched Ichimoku chart.

No clear technical resistance is seen until the 200-day moving average of around 10,066, but traders are watching 9,704 -- an intraday high reached on Sept 21 -- as a key chart point.

A break above 9,807 -- another intraday high hit on July 14 -- would pave the way for the Nikkei to rise toward 10,000, traders said.

Shares of Asahi Glass fell 0.9 percent to 873 yen the company said it would make its Korean unit, Hankuk Electric Glass, a wholly owned subsidiary for 15.9 billion yen ($192 million). (Reporting by Chikafumi Hodo; Editing by Joseph Radford)

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