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Dismal China data, G-20 meet see Nikkei take cold shower

JIJI

Stocks dropped sharply Monday, weighed down by the yen’s firming against major currencies and investor disappointment at economic growth data in China.

The Nikkei 225 closed down 209.48 points, or 1.55 percent, at 13,275.66. The Topix retreated 14.58 points, or 1.27 percent, to end at 1,133.99, snapping its eight-session winning streak.

Tokyo stocks kicked off the week with sharp losses as the yen rose against the dollar and the euro. Selling spread to a wide range of sectors, including export-oriented firms, realtors and major bank groups, brokers said.

The key indexes accelerated their downswing late in the morning session after China’s gross domestic product data for January-March fell short of market expectations. However, stocks showed some resilience in the afternoon, supported by buying on dips on the back of hopes for further gains in stock prices, according to brokers.

China’s gross domestic product grew 7.7 percent from a year earlier in price-adjusted real terms, against a consensus market forecast of an 8.0 percent rise. The slowdown strengthened risk-averse sentiment and triggered selling of China-related stocks, such as construction machinery maker Komatsu.

Many analysts believe the recent Tokyo stock rally is likely come to a temporary halt while players in the foreign exchange market take a wait-and-see stance prior to a two-day meeting of finance ministers and central bank chiefs from the Group of 20 in Washington from Thursday.

“Investors are finding it difficult to purchase stocks, as they remain cautious about the yen’s moves after the meeting,” said Hiroaki Hiwada at Toyo Securities Co.

The point is whether Tokyo can win over its G-20 partners regarding the bold monetary easing measures introduced by the Bank of Japan, an official at a brokerage firm said.

Losers far exceeded winners 1,163 to 471 in the first section, while volume fell to 4.230 billion shares from Friday’s 4.565 billion.

China-related stocks came under massive selling pressure due to the disappointing GDP data. They included robot maker Fanuc, construction machinery maker Komatsu, trader Mitsubishi and shipping firm Mitsui O.S.K. Lines. The strong yen meanwhile battered export-oriented names, including automakers Toyota and Honda and electronics producers Toshiba and Hitachi.

But Tokyo Electric rocketed 12.72 percent thanks to hopes for power industry reorganization as well as the stronger yen, which lowers fuel import costs. Kansai Electric and Kyushu Electric also enjoyed handsome gains. Sharp jumped 10.45 percent after media reports Saturday that the firm is considering selling all its shares in industry rival Pioneer to raise funds for cutting its interest-bearing debts

Slip-sliding JGBs

Japanese government bonds edged down Monday amid growing caution on auctions of new government securities scheduled for this week.

The lead June futures contract on 10-year JGBs lost 0.19 point from Friday to end at 143.54. Volume dwindled to 24,709 contracts from 36,132.

In late interdealer trading in cash JGBs, the yield on the latest 328th 10-year issue with a 0.6 percent coupon stood at 0.640 percent, up from 0.620 percent late Friday.