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Nikkei slips amid wariness over Fed’s next step

JIJI

The benchmark Nikkei average fell back Thursday amid lingering wariness over the course of the U.S. Federal Reserve’s monetary policy.

The 225-issue Nikkei average closed down 59.16 points, or 0.44 percent, at 13,365.17, the lowest finish since June 27. On Wednesday, the key market gauge climbed 27.95 points.

The Topix index of all first-section issues fell for the third consecutive session, ending down 2.18 points, or 0.19 percent, at 1,119.56. It dropped 3.53 points the previous day.

Mainstay issues met with selling in early trading after the Dow Jones average slipped for the sixth straight session Wednesday amid speculation over an early start of cutbacks in the U.S. Federal Reserve’s monetary stimulus. The Nikkei average lost as much as 185 points at one point.

But the key yardstick pared the losses and briefly rebounded into positive territory in late morning trading, led by index futures, thanks to better-than-expected Chinese manufacturing data and the yen’s fall past 98 against the dollar, brokers said.

The market failed to maintain the momentum of recovery, pressured by futures-led selling and weakness of Asian markets outside mainland China. The Nikkei average stayed in negative territory for most of the afternoon session.

Minutes of the U.S. Federal Reserve’s July policy-setting meeting released Wednesday “highlighted divergent views among members about the tapering off of its quantitative monetary easing, failing to remove market uncertainties over when the Fed will start reducing its asset purchases,” said Toshiyuki Kanayama, market analyst at Monex Inc.

Amid expectations for the Fed to decide on cutbacks at its Sept. 17-18 meeting at the earliest, many market participants are now eager to see key U.S. economic indicators for August to be released early next month, brokers said.

On Thursday, weaker stocks and currencies in Asian emerging economies due to concerns over money outflows outweighed positive news on the Chinese economy, brokers said.

JGBs in retreat

Japanese government bonds retreated Thursday, pressured by selling after U.S. Treasuries tumbled overnight and Tokyo stocks cut losses.

The lead September futures contract on 10-year JGBs lost 0.19 point to end at 143.93. Turnover increased to 24,190 contracts from Wednesday’s 18,608.