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Nikkei edges lower on yen; upbeat sentiment intact

Published 09/14/2010, 03:06 AM
Updated 09/14/2010, 03:08 AM
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* Yen hits fresh 15-year high, nudges stocks from 3-week peak

* Market range-bound ahead of ruling party leadership vote

* After the bell, Prime Minister Kan beats rival Ozawa

* Golden Cross aids benchmark but resistance looms

By Aiko Hayashi and Shinichi Saoshiro

TOKYO, Sept 14 (Reuters) - Japan's Nikkei stock average fell from a three-week closing peak logged the day before as the yen hit a fresh 15-year high against the dollar, but recent upbeat sentiment sparked by encouraging U.S. and China data remained intact.

Investors were reluctant to actively take positions ahead of results from Japan's ruling party leadership vote. After the close, Prime Minister Naoto Kan beat Ichiro Ozawa, a veteran powerbroker who was seen as more likely to pursue expansionary fiscal policies and act to combat the yen's strength.

"Worries that the global economy may suffer are continuing to ease following upbeat Chinese data and after economic forecasts were upgraded in the euro zone," said Masumi Yamamoto, a market analyst at Daiwa Securities Capital Markets.

"This helped stocks weather the yen's latest surge."

The euro zone economy is likely to grow almost twice as fast this year as previously thought, the European Commission forecast on Monday.

The outlook revision added to the buoyant mood generated following strong Chinese economic data on Saturday and from investor relief that new banking regulations set over the weekend will not unleash a rush to raise equity.

The benchmark Nikkei fell 22.51 points to 9,299.31. It rose 0.9 percent on Monday to its highest close since Aug. 19.

The broader Topix fell 0.3 percent to 834.87.

The Nikkei is 5.4 percent above a 16-month closing low struck two weeks ago, and has built on gains since a short-term buying signal emerged late last week when its 5-day moving average pierced above its 25-day moving average, forming a "Golden Cross".

"Generally speaking, the Nikkei is poised for more gains, with its 5-day and 25-day moving averages having formed a 'Golden Cross', but investor caution before the vote result weighed. The index has also already gained three days in a row," said Koichi Nosaka, a market analyst at Securities Japan, Inc.

But market players see solid resistance looming at 9,460, roughly around its 75-day moving average as well as the bottom of the Nikkei's Ichimoku cloud, around 9,530. Ichimoku charts are popular with Japanese traders.

Support is seen at 9,231, which is its kijun-sen on its daily Ichimoku charts. The kijun-sen is an indicator of medium-term trends and can be either support or resistance.

The dollar fell to a 15-year low of 83.25 yen in early trade, pressured by a fall in U.S. bond yields as well as selling in cross/yen pairs such as Aussie/yen. It briefly fell to about 83.09 yen on the vote, but later traded at around 83.40.

Shares of exporters fell, with Advantest Corp slipping 0.4 percent to 1,650 yen and Toyota Motor Corp falling 1.7 percent to 2,899 yen.

Some 1.54 billion shares changed hands on the Tokyo exchange's first section. Declining stocks outnumbered advancing ones, 887 to 582. (Editing by Edwina Gibbs)

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