By Elaine Lies
TOKYO, Jan 7 (Reuters) - Japan's Nikkei average lost 0.5 percent on Thursday, with electronics heavyweight Canon hit by a brokerage downgrade and ailing Japan Airlines Corp tumbling on a report that it was set to post a $13.3 billion net loss.
After hovering in positive territory earlier in the day, the Nikkei edged lower when commodities-linked shares pared gains after China's central bank unexpectedly raised rates at a three-month bill auction, which traders said could signal the start of monetary tightening.
That fed into concerns that the Nikkei was vulnerable to profit-taking after it notched up a 15-month closing high on Wednesday, its third day of gains.
'There are signs suggesting the market is overheating, and investors are waiting for the U.S. jobs data on Friday, with interest in these figures rising after mixed signals from data yesterday,' said Takashi Ushio, head of the investment strategy division at Marusan Securities.
'Still, there is no real change in sentiment.'
Minutes from the Federal Reserve's last meeting suggested the possibility of more stimulus measures for the U.S. economy, but a report showed the U.S. service sector posted only marginal growth. Meanwhile, a private sector employment report showed job losses slowing down but the result was still higher than expected.
In active trade, the benchmark Nikkei lost 49.79 points to 10,681.66. Its relative strength index (RSI) edged down but still clung around 70, signalling it remains overbought.
The broader Topix edged up 0.1 percent to 931.85.
After the market closed, new Finance Minister Naoto Kan called on Thursday for a weaker yen and said he would work with the Bank of Japan to get it at an appropriate level, sending the yen lower.
Nikkei futures in Osaka rose to 10,710. Investors fret about a strong yen because it eats into exporters' profits when repatriated.
RESOURCE STOCKS PARE GAINS
Canon shares declined 2.5 percent to 3,930 yen, becoming a major drag on the market after Credit Suisse cut its rating on the stock to 'neutral' from 'outperform'.
The brokerage also lowered its target price to 3,900 yen from 4,100 yen, saying it favours profit-taking in the stock for now.
JAL tumbled 9.5 percent to 76 yen. The Nikkei business daily said the struggling airline is likely to post a net loss of $13.3 billion due to a huge restructuring charge.
The Enterprise Turnaround Initiative Corp of Japan is considering injecting about $3.3 billion of fresh capital into JAL if the carrier files for bankruptcy and its banks agree to write off loans, a source familiar with the matter said.
Commodities stocks found early favour as investor risk appetite for industrial metals grew in the wake of upbeat manufacturing and auto sales data earlier in the week but later lost steam in the afternoon on the China news.
Sumitomo Metal Mining, a leading smelter, advanced 1.5 percent to 1,467 yen, with fellow smelter Dowa Holdings gaining 1.5 percent to 543 yen.
Mitsui & Co inched up 0.1 percent to 1,396 yen and fellow trading house Mitsubishi Corp was flat at 2,427 yen.
Trade was active, with 2.3 billion shares changing hands on the Tokyo exchange's first section compared with last week's daily average of 1.6 billion.
Advancing shares beat declining ones, 853 to 669.
(Additional reporting by Aiko Hayashi; Editing by Chris Gallagher)
((elaine.lies@thomsonreuters.com; +81 3 6441 1807; Reuters Messaging:elaine.lies.reuters.com@reuters.net))
Keywords: MARKETS JAPAN STOCKS (Multimedia versions of Reuters Top News are now available for: * 3000 Xtra : visit http://topnews.session.rservices.com * BridgeStation: view story .134 * Reuters Plus: from your WebDSS screen For more information on Top News, visit http://topnews.reuters.com) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
TOKYO, Jan 7 (Reuters) - Japan's Nikkei average lost 0.5 percent on Thursday, with electronics heavyweight Canon hit by a brokerage downgrade and ailing Japan Airlines Corp tumbling on a report that it was set to post a $13.3 billion net loss.
After hovering in positive territory earlier in the day, the Nikkei edged lower when commodities-linked shares pared gains after China's central bank unexpectedly raised rates at a three-month bill auction, which traders said could signal the start of monetary tightening.
That fed into concerns that the Nikkei was vulnerable to profit-taking after it notched up a 15-month closing high on Wednesday, its third day of gains.
'There are signs suggesting the market is overheating, and investors are waiting for the U.S. jobs data on Friday, with interest in these figures rising after mixed signals from data yesterday,' said Takashi Ushio, head of the investment strategy division at Marusan Securities.
'Still, there is no real change in sentiment.'
Minutes from the Federal Reserve's last meeting suggested the possibility of more stimulus measures for the U.S. economy, but a report showed the U.S. service sector posted only marginal growth. Meanwhile, a private sector employment report showed job losses slowing down but the result was still higher than expected.
In active trade, the benchmark Nikkei lost 49.79 points to 10,681.66. Its relative strength index (RSI) edged down but still clung around 70, signalling it remains overbought.
The broader Topix edged up 0.1 percent to 931.85.
After the market closed, new Finance Minister Naoto Kan called on Thursday for a weaker yen and said he would work with the Bank of Japan to get it at an appropriate level, sending the yen lower.
Nikkei futures in Osaka rose to 10,710. Investors fret about a strong yen because it eats into exporters' profits when repatriated.
RESOURCE STOCKS PARE GAINS
Canon shares declined 2.5 percent to 3,930 yen, becoming a major drag on the market after Credit Suisse cut its rating on the stock to 'neutral' from 'outperform'.
The brokerage also lowered its target price to 3,900 yen from 4,100 yen, saying it favours profit-taking in the stock for now.
JAL tumbled 9.5 percent to 76 yen. The Nikkei business daily said the struggling airline is likely to post a net loss of $13.3 billion due to a huge restructuring charge.
The Enterprise Turnaround Initiative Corp of Japan is considering injecting about $3.3 billion of fresh capital into JAL if the carrier files for bankruptcy and its banks agree to write off loans, a source familiar with the matter said.
Commodities stocks found early favour as investor risk appetite for industrial metals grew in the wake of upbeat manufacturing and auto sales data earlier in the week but later lost steam in the afternoon on the China news.
Sumitomo Metal Mining, a leading smelter, advanced 1.5 percent to 1,467 yen, with fellow smelter Dowa Holdings gaining 1.5 percent to 543 yen.
Mitsui & Co inched up 0.1 percent to 1,396 yen and fellow trading house Mitsubishi Corp was flat at 2,427 yen.
Trade was active, with 2.3 billion shares changing hands on the Tokyo exchange's first section compared with last week's daily average of 1.6 billion.
Advancing shares beat declining ones, 853 to 669.
(Additional reporting by Aiko Hayashi; Editing by Chris Gallagher)
((elaine.lies@thomsonreuters.com; +81 3 6441 1807; Reuters Messaging:elaine.lies.reuters.com@reuters.net))
Keywords: MARKETS JAPAN STOCKS (Multimedia versions of Reuters Top News are now available for: * 3000 Xtra : visit http://topnews.session.rservices.com * BridgeStation: view story .134 * Reuters Plus: from your WebDSS screen For more information on Top News, visit http://topnews.reuters.com) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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