Nikkei falls, China credit tightening hits smelters

Tokyo, June 19: The Nikkei average fell 0.5 percent on Monday as non-ferrous metal smelters such as Mitsubishi Materials Corp. fell amid concerns about a slowdown in demand after China on Friday moved to curb rapid credit growth to prevent the economy from overheating.

Brokerages such as Nomura Holdings Inc. also fell on profit-taking after the Nikkei posted its biggest one-day percentage gain since February in the previous session.

The Nikkei was down 74.52 points at 14,804.82 as of 0047 GMT.

It jumped 2.82 percent on Friday, its biggest one-day percentage gain since Feb. 21.

The TOPIX index was down 0.65 percent at 1,524.67.

''It's a knee-jerk reaction to strong gains late last week,'' said Tatsuyuki Kawasaki, director of equities trading division at Kaneyama Securities.

He also said concerns about demand from China hurt investor appetite for commodity-related stocks.

''China has put a brake on its red-hot economy and that naturally causes fears about its impact on commodities markets, namely non-ferrous metals and oil,'' he said.

China's central bank on Friday imposed new limits on the amount of money commercial banks can lend.

Mitsubishi Materials, Japan's biggest non-ferrous metals smelter, was down 1.7 percent at 464 yen.

Japan's No.2 steel maker JFE Holdings Inc. fell 1.1 percent to 4,430 yen, helping send the sector subindex ISTEL.down 0.92 percent.

Construction machinery maker Komatsu Ltd., whose business has expanded on strong demand in China, lost 2.1 percent to 2,105 yen.

Nomura, Japan's No.1 brokerage firm, dropped 2.3 percent to 2,135 yen, trimming a 6.6 percent jump on Friday. The share's fall came despite its plan, unveiled on Friday, to launch a global campaign this month to promote Japanese stocks to institutional investors, its second international sales drive since it revived such efforts last year.

No.2 brokerage Daiwa Securities Group lost 2.4 percent to 1,328 yen.

Investors mostly shrugged off reports about the likelihood of an imminent missile test by North Korea. But the Tokyo market could be hurt if the test goes ahead and increases political tension in the region, analysts said.

Japan warned North Korea on Sunday of a ''harsh response'' from Tokyo and Washington if it went ahead with a test.

Reuters