Nikkei slips on global growth worries, US data eyed

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Nikkei slips on global growth worries, US data eyed

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Analysts said that light volume also made the market vulnerable to drops.

18 August,2011 11:07 am

Japans Nikkei stock average fell for a second straight day on Thursday, hurt by the yens persistent strength and fears the US might be heading for another recession, with many investors on the sidelines ahead of US economic data.Analysts said that light volume also made the market vulnerable to drops, with futures selling kicking in during the afternoon when falls in Asian stocks added to concerns.They said that the mood was further soured by capital flows data that showed foreign investors net sell orders of Japanese shares hit their highest in more than a year.There is risk reduction being seen among foreign investors with currency levels (the yen) showing elevated levels, said Mattia Ciancaleoni, director of equity sales at Citigroup.The benchmark Nikkei N225 was down 1.2 percent at 8,950.93, slipping further from a one-week intraday high of 9,150.31 hit on Tuesday, while the broader Topix index TOPX fell 1.2 percent to 767.01.While US data such as consumer prices and existing home sales numbers are due on Thursday, Ciancaleoni said investors are focusing on whether Fed Chairman Ben Bernanke will drop any hints about further monetary easing measures when he speaks at a regional event in Jackson Hole, Wyoming, next week.Chip-related shares underperformed as a disappointing sales outlook from Dell (DELL.O) fanned worries that weaker economic growth will hurt earnings in the third quarter and sent U.S. tech shares tumbling.The biggest problem for investors right now is the strong yen, said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments.NARROW RANGEThis week the dollar has traded in a narrow range just above its historical record low of 76.25 yen. But Tokyo currency traders say the greenback could test that level next week when more market participants return from summer vacation and as many exporters may sell the dollar in month-end transactions.A strong currency undermines the value of Japanese exporters overseas profits, and also makes Japanese shares less attractive to investors holding other currencies.