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Nikkei falls on dismal machinery orders

JIJI

Stocks lost ground Thursday with investor sentiment hurt by Japan’s disappointing machinery orders in May.

The Nikkei 225 average lost 86.18 points to close at 15,216.47. The Topix ended 11.57 points lower at 1,259.25.

Both indexes extended their losing streaks to a fourth session.

Stocks opened on a solid note after Wall Street’s rise overnight but fell into negative territory as core machinery orders in May, released just before the opening bell, fell far short of market expectations, brokers said.

Private-sector orders excluding those for ships and power equipment plunged 19.5 percent from the previous month against a market forecast of a 0.6 percent increase. The fall was the steepest since comparable data became available in April 2005.

After drifting in a narrow range, the key indexes accelerated their downswing in the afternoon, affected by speculative selling prior to Friday’s special quotation fixing to settle July options contracts, brokers said.

Profit-taking ballooned in the late afternoon amid a sense of short-term overheating, brokers also said.

“There have been expectations that several Japanese companies will revise up their earnings estimates. But the disappointing machinery orders poured cold water on such hopes,” said Kenichi Hirano, market analyst at Kasset Co. “The machinery data was a favorable cue for sellers.”

Analysts said that the Tokyo market has been supported by speculation that the Bank of Japan has kept buying exchange traded-funds and hopes for strong U.S. corporate earnings.

Additional incentives, such as the yen’s depreciation against the dollar and greater rises in New York equities, are necessary to boost the key indexes, an official at a midsize brokerage firms said.

Falling issues overwhelmed rising ones 1,465 to 260 on the first section, while 90 issues were unchanged.

Volume decreased to 1.973 billion shares from Wednesday’s 2.044 billion.

Thirty-two of the 33 sector subindexes of the first section ended lower.

Benesse Holdings plunged 4.93 percent after its announcement Wednesday that information on up to 20.7 million customers of its group correspondence education service unit may have been leaked.

JustSystems briefly tumbled by its daily limit on news that it used leaked data of the Benesse group.

Automakers Toyota, Honda and Mazda as well as camera maker Canon were lower on the stronger yen.

Major financial names were dampened by players with selling incentives, brokers said. Among them were brokerage firm Nomura and megabank groups Mitsubishi UFJ and Sumitomo Mitsui.

On the other hand, a handful of winners included airline JAL, clothing retailer Fast Retailing and semiconductor-related Tokyo Electron.