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Nikkei continues fall amid sense of overheating

JIJI

Stocks lost further ground Wednesday, dragged down by selling due to a sense of overheating in the market.

The 225-issue Nikkei average closed down 75.15 points, or 0.61 percent, at 12,239.66. On Tuesday, the key market gauge sagged 34.24 points to snap its eight-session winning streak. The Topix index of all first-section issues dropped 4.48 points, or 0.43 percent, to end at 1,031.42, after losing 4.08 points the previous day.

Although the Dow Jones industrial average hit a record closing high for the sixth straight session overnight, Tokyo stocks came under selling pressure from the outset of Wednesday’s trading amid a sense of market overheating after the recent rapid rise.

Investor sentiment was also dampened by a halt in the yen’s weakening against other major currencies.

Still, the key indexes briefly popped up into plus territory in the morning session, supported by buying on dips and buybacks, brokers said.

In the afternoon, stocks moved in negative territory, weighed down by selling of heavily weighted component issues of the Nikkei average, such as clothing retailer Fast Retailing, on the back of poor performances of other Asian equities, brokers said.

The market was also met with selling by fund managers to lock in profits prior to the March 31 end of fiscal 2012, an official at a major securities firm said.

“It is no surprise to see a correction” because investors have priced in positive news related to the Bank of Japan’s new leadership team and Prime Minister Shinzo Abe’s economic policies, said Hideyuki Suzuki, head of the investment market research department at SBI Securities Co.

Hiroichi Nishi, equity general manager at SMBC Nikko Securities Inc., said, “Expectations for the new BOJ leaders and Abe’s policies are high” after media reports that the Diet is expected to approve the government’s nominees for the central bank governor and two deputy governors and Abe will likely announce Friday that the country will enter Trans-Pacific Partnership free-trade negotiations.

JGBs lack incentives

Japanese government bonds moved withing a narrow range Wednesday amid a lack of fresh incentives.

The lead June futures contract on 10-year JGBs closed down 0.03 point from

Tuesday at 145.11. Volume shrank to 24,886 contracts from 33,910.