Nikkei falls to lowest close since November

Tokyo, June 7: The Nikkei average fell 1.88 percent on Wednesday to book its lowest close since last November, as concerns of a possible slowdown in the U.S. economy and its impact on Japan hit exporters such as Honda Motor Co.Ltd.

Selling in the futures market also weighed on the cash market. Analysts said futures trading was likely to be volatile ahead of Friday's settlement of June Nikkei futures and options contracts, known as the ''special quotation'' or ''SQ''.

Exporters lost ground with Honda Motor down 2 percent at 7,190 yen and Toyota Motor Corp. losing 1.3 percent to 5,920 yen.

Andrew Millward, a fund manager at Henderson Global Investors Japan K.K, said the U.S. economy is slowing and the housing sector will be a key indicator to gauge U.S. consumption in Japan's key export market.

''There will be a slowdown in the United States as interest rates continue to rise a little bit more and previous interest rate hikes take effect ... that will have a negative impact on exporters,'' he said.

Instead, Millward said his fund is buying domestic stock such as bank shares as the Japanese economy is looking more attractive than the U.S.

''You've got the Japanese economy firing on all cylinders really, consumption and capex. It's looking quite good. I think a more attractive place to invest in is domestic stocks, not exporters,'' he said.

The Nikkei lost 288.85 points to 15,096.01, the lowest close since Nov. 30. The broader TOPIX index fell 2.15 percent to 1,533.54, also its lowest close since November.

Exactly two months ago, the Nikkei hit its highest in more than five years. Since then it has had a steep downhill tumble, giving up nearly 2,500 points.

So far, the Nikkei has lost 6.30 percent this year and the TOPIX has given up 7.04 percent.

Machinery maker Komatsu Ltd. fell after KBC Securities downgraded it, and electronics maker Pioneer Corp. lost ground after a management briefing disappointed analysts who said it lacked detailed plans.

Komatsu shed 6.5 percent to 2,015 yen after KBC Securities cuts its rating to ''sell from buy'' and Pioneer tumbled 6.6 percent to 1,766 yen on its disappointing briefing.

The steel sector ISTEL, which has outperformed the TOPIX in the past one month, came under pressure. JFE Holdings Inc. was down 4.1 percent at 4,640 yen and Nippon Steel Corp gave up 4.5 percent to 401 yen.

The Mothers market for startups ended down 2.2 percent at 1,325.28, extending its losses into a second session.

Takashi Miyazaki, general manager at Mitsubishi UFJ Partners Asset Management's investment strategy division, said stop-loss selling from retail investors accelerated the market's fall.

''I think the main driver is loss-cut selling from individual investors and arbitragers, who have piled up their positions until recently,'' he said.

Trade was the most active in three sessions, with 1.96 billion shares changing hands on the Tokyo exchange's first section. Declining shares outnumbered gainers by a ratio of more than 7 to 1.

Reuters