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Nikkei drops slightly as investors sell on a rally

JIJI

Stocks turned slightly lower Thursday, hurt by selling on a rally and profit-taking.

The Nikkei 225 average lost 25.26 points to close at the day’s low of 14,155.12. On Wednesday, the key market gauge gained 171.91 points.

The Topix lost 0.27 point to end at 1,162.37 after rising 23.37 points Wednesday.

Despite Wall Street’s drop overnight, stocks opened with gains thanks to buybacks and buying on dips after the recent selloffs.

The Nikkei briefly rose more than 120 points.

The benchmark index gradually cut its gains, hit by futures-led selling, and briefly fell into negative territory in late morning trading.

In the afternoon, stock prices attracted renewed purchases on the back of solid performances of Asian equities and the yen’s weakening against other major currencies, brokers said.

However, the Nikkei and the Topix both failed to remain in positive territory, weighed down by selling on a rally and some profit-taking, brokers said.

The market was not in a mood that allows investors to step up purchases, amid prevailing wariness over the course of the U.S. and emerging economies, brokers said.

Still, their willingness to buy on dips was strong, with buying concentrated on companies that have announced brisk earnings or full-year estimates, brokers said.

Several analysts said the market has shown signs of bottoming out.

But Masayuki Otani, chief market analyst at Securities Japan Inc., was cautious.

“It was too early to say that the market has bottomed out. Downside risks still remain,” he said. “Investors need to confirm the U.S. jobs data (due out Friday), as well as a number of upcoming economic indicators next week.”

Rising issues outstripped falling ones 1,117 to 577 in the first section, while 86 issues were unchanged.

Volume decreased to 2.719 billion shares from Wednesday’s 3.761 billion.

JGBs move lower

Japanese government bonds lost ground Thursday, pressured by overnight falls in U.S. Treasuries and weaker than expected 30-year JGB auction results.

The lead March futures contract on 10-year JGBs closed down 0.08 point from Wednesday at 144.80. Volume increased to 31,882 contracts from 24,907.