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Nikkei sags on selling amid signs of overheating

JIJI

Stocks slumped Wednesday, weighed down by selling amid technical signs of market overheating.

The Nikkei 225 average closed down 112.08 points at the day’s low of 14,620.53, extending its losing streak to a third session. The Topix fell 3.72 points to end at 1,211.15.

Stocks headed lower from the outset after a lackluster performance in New York stocks overnight. Selling on the recent rally also hit stock prices, as several technical charts suggested overheating. The Nikkei surged 10 percent in the first three weeks of September.

Brokers said the Nikkei’s drop reflects deteriorated investor sentiment over the course of U.S. monetary policy and the federal government’s debt ceiling. Still, the TSE’s downside was supported by buying to secure midterm dividends, as Wednesday was the final trading day for settlement in the first half of fiscal 2013.

The effects of selling on a rally were tempered by “buying on hopes for economic measures to be hammered out along with the government’s expected decision on a consumption tax hike,” said Nobuyuki Fujimoto at SBI Securities Co.

Prime Minister Shinzo Abe is expected to make a final decision Tuesday on whether to go ahead with the tax increase. Expectations are also high that Abe may give a positive outlook for Tokyo stocks at a New York meeting Thursday about Japan’s revitalization, Fujimoto said.

Falling issues outnumbered rising ones 1,029 to 623 in the first section, while volume increased to 3.112 billion shares from Tuesday’s 2.833 billion.

Steel makers JFE Holdings and Kobe Steel came under profit-taking pressure after the recent surge, while selling on a rally dampened realtors Mitsui Fudosan, Sumitomo Realty and Tokyu Land. But Tokyo Electron rocketed 13.20 percent after announcing Tuesday an agreement to merge with U.S. chip-making equipment peer Applied Materials Inc.

JGBs edge higher

Japanese government bond futures advanced slightly Wednesday on the heels of an overnight rise of U.S. Treasury securities.

The ead December contract on 10-year JGBs finished up 0.04 point from Tuesday at 144.15. Volume grew to 22,051 contracts from 18,335. In late interdealer trading in cash JGBs, the yield on the latest 330th issue with a 0.8 percent coupon stood at 0.670 percent, unchanged from late Tuesday.