Reuters: Financial Services and Real Estate: Nikkei sags, market retreats as euro uncertainty returns

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Nikkei sags, market retreats as euro uncertainty returns Jun 8th 2012, 01:40 Thu Jun 7, 2012 9:40pm EDT * Renesas surges 18 pct on short squeeze * Nikkei still on track to break 9-week losing streak * China stimulus effort fails to ignite sentiment By Sophie Knight TOKYO, June 8 (Reuters) - Japan's Nikkei share average slipped in early trade on Friday as lurking fears about a troubled euro zone outweighed China's efforts to stimulate its slowing economy, The U.S. Federal Reserve's refusal to commit to immediate easing also disappointed investors. The Nikkei retreated 1.4 percent to 8,523.32 as a risk-off atmosphere returned, but gains over the three previous sessions still leaves it poised to break its longest weekly losing streak in 20 years. "Investors have pared their losses in the rebound, but there's not enough motivation to sustain a real rally, so the market is correcting," said Fujio Ando, senior managing director at Chibagin Asset Management. Market players said the week's gains before Friday were driven by short-covering and bargain buying, with a few investors putting in long bets, but did not reflect greatly improved risk sentiment. "The Greek election is still to come, nothing concrete has been decided in Europe and Draghi didn't commit to anything," Ando said, referring to the president of the European Central Bank who put the onus on European governments to solve the euro zone debt crisis on Wednesday. Renesas Electronics Corp sprinted up 18 percent as investors covered their shorts, according to Makoto Kikuchi, chief executive of fund Myojo Asset Management. "Investors started buying back aggressively when the stock was below 300 yen because they no longer think the stock will react to negative news," Kikuchi said. The troubled chipmaker abandoned a plan to ask its major shareholders for a capital injection to pull it out of the red, the Mainichi daily said on Friday. Fed chairman Ben Bernanke dashed investor hopes on Thursday that the U.S. would introduce further easing to stimulate the sluggish recovery in the world's biggest economy, although he did not rule out extra measures altogether. "Bernanke did say that the Fed will act if the euro zone's problems get worse, which will be seen as a plus," said Hiroichi Nishi, equity general manager at SMBC Nikko Securities. Consumer electronics companies suffered, with Sony Corp and Sharp Corp both dropping 3.6 percent. Chipmakers also slipped after being in favour yesterday following overnight gains in a U.S. chip index. Toshiba Corp fell 2 percent and Tokyo Electron Ltd shed 2.6, but Advantest swam against the tide with a 2.5 percent gain. The broader Topix index fell 1.2 percent to 722.94, holding above the psychologically important 700-level, which it breached on Monday to hit a 28-year low. The Nikkei would have to fall 2.3 percent or more on Friday to end down on the week and mark ten straight weeks of losses, the worst in 35 years. Link this Share this Digg this Email Reprints

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