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Nikkei weighed down by yen but stays rangebound

Published 10/25/2010, 09:22 PM
Updated 10/25/2010, 09:24 PM

* Nikkei weighed down as yen stays near record high

* Japan earnings eyed, as well as UBS, Deutsche results

* Nikkei capped by 25-day moving average near 9,500

TOKYO, Oct 26 (Reuters) - Japan's Nikkei average edged lower on Tuesday as the yen stayed near a 15-year high against the dollar, but many investors took a wait-and-see stance as Japanese firms head into the peak of their earnings reporting.

The Nikkei moved in a narrow range with traders hesitant about taking fresh long positions after the yen firmed to a fresh 15-year high of 80.41 against the dollar on Monday, approaching its record high of 79.75 yen.

"The market remains thin and rangebound today. As long as the yen's bullishness prevails, the Nikkei will be pressured," said Tomomi Yamashita, a fund manager at Shinkin Asset Management.

"The mood of the market is not too good. There are many investors showing selling interest, while there are only a few active buyers out there now," Yamashita said.

The benchmark Nikkei was trading down 0.2 percent or 21.44 points at 9,479.72 by mid-morning while the broader Topix fell 0.3 percent to 819.19.

A slew of major Japanese companies report earnings this week, including Canon Inc on Wednesday and Sony Corp on Friday.

The market is also focusing on how Euroepean shares move after earning announcements by such banks as UBS later on Tuesday and Deutsche Bank AG on Wednesday, Yamashita said.

The Nikkei is expected to be supported at last week's intraday lows of around 9,310-9,320, with the upper level of its daily Ichimoku charts around 9,300 also seen as a key technical support.

Some technical resistance is seen at the 25-day average, now at 9,497.

Traders said the market will seek direction from moves in the the dollar/yen rate.

The yen inched down to around 80.73 yen against the dollar in Asian morning trade.

The strength of the yen weighed on shares of exporting companies including Sony Corp, which was down 0.4 percent at 2,714 yen, and Toyota Motor down 0.7 percent at 2,873 yen.

Shares of GS Yuasa Corp, Japan's top car battery maker, rose 1.4 percent to 586 yen after it raised its net profit estimate for April-September to 2.5 billion yen ($30.94 million) from 1.5 billion yen, citing a strong performance by subsidiaries overseas.

Shares of Astellas Pharma fell 1.1 percent to 3,025 yen after the Nikkei business daily said the drugmaker is expected to post a lower operating profit for the full year ending in March 2011, hurt by goodwill write-offs. ($1=80.80 Yen) (Reporting by Chikafumi Hodo; Editing by Michael Watson)

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