RTRS: Nikkei down 1.3 percent in lacklustre trade, eyes on yen
By Elaine Lies
TOKYO (Reuters) - Japan's Nikkei average lost 1.3 percent on Wednesday as the yen's advance against the dollar hit Sony Corp (6758.T: Quote, Profile, Research, Stock Buzz) and other exporters, with tech shares suffering on demand fears as the global economy worsens.
Panasonic Corp (6752.T: Quote, Profile, Research, Stock Buzz) shed nearly 3 percent after Goldman Sachs said it had broken off talks on the possible sale of Goldman's shares in Sanyo Electric Co Ltd (6764.T: Quote, Profile, Research, Stock Buzz).
Though the market welcomed the Federal Reserve's massive new programme to aid the beleaguered American consumer, a programme that helped the Dow and S&P 500 extend gains on Tuesday, many players noted that numerous problems remain and have yet to be adequately dealt with.
"The Fed appears to have moved quickly, but how soon will this policy actually have an impact? In a way, its scale underlines how serious the situation is," said Takashi Ushio, head of the investment strategy division at Marusan Securities.
"The problems of GM and Ford still remain, so there's still a lot of uncertainty."
The Fed said it will buy up to $100 billion of debt issued by government-sponsored mortgage enterprises Fannie Mae (FNM.P: Quote, Profile, Research, Stock Buzz), Freddie Mac (FRE.P: Quote, Profile, Research, Stock Buzz) and the Federal Home Loan banks. It will also purchase up to $500 billion of mortgage securities backed by Fannie Mae, Freddie Mac and Ginne Mae.
The central bank also teamed with the Treasury Department to launch a $200 billion facility to support consumer finance.
"The new Fed bailout is of course a good thing to do, but it raises the question about what sort of pressure this is putting the Fed under," said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Securities.
"Again, there were a lot of bad indicators out showing a poor economy. Deflationary pressure in the United States is high."
The benchmark Nikkei .N225 shed 108.27 points to 8,215.66, a day after rising 5.2 percent for its biggest one-day gain in two weeks. The broader Topix .TOPX lost 1.7 percent to 817.55.
YEN ADVANCES, EXPORTERS RETREAT
The yen advanced against the dollar, which had slipped to a little over 95 yen by midday on skepticism that the Fed's move would ease concerns about the financial crisis. Exporters -- vulnerable to such currency moves as their earnings are undercut by a strong yen when repatriated -- slipped, with Sony falling 2.2 percent to 1,875 yen and Canon Inc (7751.T: Quote, Profile, Research, Stock Buzz) shedding 1.6 percent to 2,860 yen. Hitachi Ltd (6501.T: Quote, Profile, Research, Stock Buzz) lost 5.4 percent to 423 yen.
Honda Motor Co (7267.T: Quote, Profile, Research, Stock Buzz) fell 2.9 percent to 2,030 yen and Toyota Motor (7203.T: Quote, Profile, Research, Stock Buzz) lost 4.6 percent to 2,985 yen.
Tech shares were pressured after the Nasdaq fell after bellwether Cisco Systems (CSCO.O: Quote, Profile, Research, Stock Buzz) said it will close most of its operations in the United States and Canada for five days to cut costs.
Kyocera Corp (6971.T: Quote, Profile, Research, Stock Buzz) lost 3 percent to 4,890 yen and TDK Corp (6762.T: Quote, Profile, Research, Stock Buzz) dropped 2.4 percent to 2,900 yen.
So-called defensive shares -- those seen as resilient in the face of economic troubles -- provided support, though this was not the case across the board.
Softbank Corp (9984.T: Quote, Profile, Research, Stock Buzz) climbed 2.5 percent to 1,336 yen, becoming the second-largest contributor to the Nikkei 225 by volume weight. KDDI Corp (9433.T: Quote, Profile, Research, Stock Buzz) rose 1 percent to 616,000 yen, while soy sauce giant Kikkoman Corp (2801.T: Quote, Profile, Research, Stock Buzz) gained 2.1 percent to 976 yen.
Trade was light, with 729 million shares changing hands on the Tokyo exchange's first section compared with last week's morning average of 932 million.
Declining shares outnumbered advancing ones by 3 to 1.
(Reporting by Elaine Lies; Editing by Chris Gallagher)