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Nikkei pulls back on Wall Street drop, firmer yen

JIJI

Stocks retreated Thursday, pressured by a lackluster performance from U.S. equities and a rise in the yen against the dollar and euro.

The Nikkei 225 average closed down 162.82 points, or 1.22 percent, at 13,220.07. The Topix retreated 13.04 points, or 1.15 percent, to end at 1,122.97.

Stocks got off to a weak start after New York equities fell overnight on growing concern about U.S. corporate earnings.

The Nikkei briefly tumbled more than 180 points, dragged down by index futures-led selling, but trimmed its losses in midmorning, helped by purchases of bank and realtor stocks.

However, the key yardstick fell again in the afternoon in line with the yen’s renewed strength, brokers said.

Investors refrained from buying stocks before a two-day meeting of finance ministers and central bank chiefs from the Group of 20 economies that starts Thursday in Washington, brokers said.

Market participants are concerned the G-20 officials will warn against a rapid weakening of the yen and are nervous about how the currency will move after the closely watched meeting, brokers said.

Nevertheless, Hideyuki Suzuki, head of the investment market research department at SBI Securities Co., said, “I believe no such remarks will be made.”

Suzuki said many think the market has entered a correction phase, but the recent losses simply reflect worries about the G-20 meeting and came in response to the rapid gains earlier this month.

“Investors’ buying appetite remains strong, considering brisk purchases of small-capital stocks,” he added.

Losers outnumbered winners 1,086 to 515 in the first section, while 111 issues were unchanged.

Oil distributor Idemitsu Kosan sank 2.57 percent after the key crude oil futures contract in New York hit a four-month closing low Wednesday. Showa Shell and Cosmo Oil also sank.

Solid day for JGBs

Japanese government bonds gained ground Thursday, backed chiefly by a smooth placement of new 20-year JGBs.

The lead June futures contract on 10-year JGBs rose 0.37 point from Wednesday to end at 144.46. Volume edged up to 27,408 contracts from 22,193.

In late interdealer trading in cash JGBs, the yield on the 328th 10-year issue with a 0.6 percent coupon was 0.585 percent, down from 0.590 percent Wednesday.