Nikkei slips from 3-month high, slips 0.1%

Japan's Nikkei average slipped from a three-month high on Tuesday after Greek leaders delayed a decision yet again on the unpopular terms of a new $170 billion bailout, tempering optimism over the health of United States' economy.

"This is mostly profit-taking and not panicked selling on the Greek default concerns. There is a strong sense of belief that the Greek bailout will be decided at the last minute," said Ryota Sakagami, chief strategist of equity research at SMBC Nikko Securities.

Gains in Japan Tobacco and shippers offered support to the Nikkei, which eased 0.1% to 8,917.52 after hitting a three-month closing high on Monday following US jobs data that beat market expectations.

Market players said the Nikkei was likely to be rangebound over the next day or two as the benchmark faces major resistance at 9,000 and 9,050, a closing high marked in October.

Japan Tobacco jumped 5.5% and became the top weighted gainer among Nikkei 225 components after it raised its annual operating profit forecast by 11% to 365 billion yen on stronger domestic cigarette sales. It also raised its annual dividend forecast 12.5% to 9,000 yen.

The sea transport subindex climbed 2.6% as investors covered short positions after the Baltic Dry Index, a barometer of demand for shipping, snapped a 33-session losing streak.

Kawasaki Kisen, Mitsui O.S.K. Lines and Nippon Yusen climbed between 1.3 and 2.4%, while Meiji Shipping jumped 21.9%.

Among global shippers, Kawasaki Kisen is the most shorted Japanese firm, with 7.3% of its total shares being on loan, data from securities lending analyst Dataexplorers showed. Nippon Yusen followed with 5.3% of its total shares being on loan.

The broader Topix added 0.4% to 772.77.

Stefan Worrall, director of equity cash sales at Credit Suisse in Tokyo, said it was encouraging to see Japanese equities consolidating at these levels despite worries in the US that the January rally in equities was petering out.

"The market is still not rolling over yet," he said.

Upbeat market

The Topix is up 6.1% so far this year, helped by a brightening outlook for the US, which offset Japan's disappointing corporate earnings so far.

Underscoring relatively strong underlying sentiment, the Nikkei volatility index fell 1.9% on Tuesday. The lower the volatility, the higher the risk appetite.

Around two-third of the 114 Nikkei companies that have reported have failed to meet market expectations, Thomson Reuters StarMine data showed. That compares with just one-third of S&P 500 companies.

But others noted further gains are likely to be difficult.

"Corporate results in Japan have been quite bad and although all the bad news is out now, there's no incentive for investors to buy further," SMBC Nikko Securities' Sakagami said.

"What we are seeing is primarily buying back of stocks that were sold off before earnings announcements and market participants are not actively buying stocks on hopes for the next quarter."

With the recent gains, the Topix carries a 12-month forward price-to-earnings ratio of 12, a level not seen since early August, data from Thomson Reuters Datastream showed.

Also aiding the market on Tuesday was Kansai Electric Power Co , up 4.8% after the Yomiuri newspaper said the government aims to restart reactors at the utility's Ohi nuclear power plant around April pending local authorities' approval.

Automakers were steady on Tuesday, with Toyota Motor Corp ending flat ahead of its earnings after the close and Nissan Motor Co adding 0.1%.

After the bell, Toyota reported a forecast-beating 51% rise in quarterly operating profit, defying the impact of a strong yen and Thai floods, and lifted its cautious annual forecasts closer to market expectations.

Dainippon Screen Manufacturing Co , however, sank 7.1%, hurt by a weak outlook for orders in the January-March quarter, analysts said.