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Nikkei heads south on dismal data from China

JIJI

Stocks retreated Thursday, pressured by selling after the release of disappointing Chinese economic data.

The Nikkei 225 average dropped 125.07 points to end at 15,695.89 after inching 25.00 points higher Wednesday.

The Topix closed 12.11 points lower at 1,287.52 a day after rising 3.68 points.

Despite a lackluster performance on Wall Street overnight, Tokyo stocks attracted purchases from the outset of Thursday’s trading on the back of the yen’s weakening against other major currencies.

The Nikkei average briefly rose more than 130 points, but cut gains after the HSBC China manufacturing purchasing manager’s index for January, announced later in the morning session, turned out worse than expected, brokers said.

The Nikkei fell into minus territory in the afternoon, hit by a flurry of futures-led selling, brokers said. It extended losses due chiefly to plunges in heavily weighted component names, including mobile carrier SoftBank.

China’s PMI stood at 49.6, slipping below the boom-or-bust line of 50 for the first time in six months.

Following the data, China-related names, such as construction machinery maker Komatsu and robot maker Fanuc, came under selling pressure.

Masashi Oguchi of Mito Securities Co.’s investment information department said “investors turned somewhat wary” as Bank of Japan Gov. Haruhiko Kuroda made cautious remarks about additional monetary easing at a news conference Wednesday after the BOJ’s two-day policy-setting meeting.

Selling spread not only to mainstay large-cap issues but also small-caps that have drawn purchases recently, brokers said.

Many analysts believe corporate scorecards set for release from next week will be a key to an upturn of stock prices. Oguchi has a dissenting view, though.

“Investors have already factored in upward revisions to full-year earnings estimates,” he said. “Unless there are huge surprises, the upcoming reports are unlikely to boost stock prices.”

JGBs advance

Japanese government bonds rose Thursday after the day’s auction of new 20-year JGBs confirmed strong buying interest.

The lead March futures contract on 10-year JGBs ended up 0.20 point at 144.35.

Volume increased to 44,942 contracts from Wednesday’s 32,104.