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Nikkei falls back to Earth after sharp increase

JIJI

Stocks turned lower Friday as profit-taking increased following the Nikkei 225 average’s rise to its highest closing in nearly six years.

The Nikkei gave up 65.25 points to end at 15,661.87. On Thursday, the key market gauge shot up 277.49 points.

The Topix ended down 2.38 points at 1,258.66 after gaining 13.96 points Thursday.

Stocks fell prey to selling pressure from the outset following the Nikkei’s stellar performance the day before.

Investors grew wary of overheating after the TSE’s recent sharp upswing, brokers said, adding that mainstay issues took the brunt of profit-taking.

Still, “there are no negative factors for Japanese stocks other than fears of overheating,” an official at a bank-affiliated securities firm said.

Hopes for stronger than expected earnings at Japanese firms are growing thanks partly to the yen’s weakening, brokers said.

After the weaker start, the Nikkei temporarily climbed back into the plus side, supported by expectations for improvements in corporate earnings.

The market quickly lost steam in midafternoon trading, with the key yardstick plunging more than 200 points. “Position-squaring sales grew ahead of the weekend and at the end of the month,” Ryuta Otsuka, strategist at Toyo Securities Co., said.

But the downside was again underpinned by steady demand, and the Nikkei recouped much of the loss toward the close.

Market players are keen for U.S. employment data for November, to be released by the Labor Department on Dec. 6, as a major clue to predicting the timing for the Federal Reserve to start scaling back its quantitative easing policy, brokers said.

Falling issues outnumbered rising ones 880 to 698 in the first section, while 183 issues were unchanged. Volume rose to 2.381 billion shares from Thursday’s 2.276 billion.

Electronics maker Hitachi shed early gains to end slightly lower. Rivals Panasonic, Toshiba and Mitsubishi Electric lost ground as well.

JGBs lack direction

Japanese government bonds were flat Friday in directionless trading.

In late interdealer trading in cash JGBs, the yield on the latest 331st 10-year issue with a 0.6 percent coupon stood at 0.600 percent, unchanged from late Thursday, after briefly rising to 0.610 percent.