Nikkei may break below 14,000 as sentiment remains fragile

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Reuters TOKYO
Last Updated : May 28 2013 | 5:06 AM IST

TOKYO (Reuters) - Japan's Nikkei share average is expected to open lower and may break below the 14,000-mark on Tuesday as investor sentiment remains fragile after last week's turbulent trade raised questions about the sustainability of the remarkable bull-run

The Nikkei <.N225> is likely to trade between 13,750 and 14,150 after skidding 3.2 percent to 14,142.65 in the previous session, strategists said.

Investors remain nervous after the Nikkei plunged 7.3 percent last Thursday, its biggest single-day percentage loss since the March 2011 earthquake and tsunami. The selloff was triggered by worries the U.S. Federal Reserve will roll back its stimulus this year and weak factory activity data from China, Japan's second-biggest export market.

"The very fragile market will continue because market participants are cautious over the uncertainty in the short-term," said Takashi Hiroki, chief strategist at Monex Inc.

"The Nikkei futures dropped to around 13,700 in the night session."

On Monday, the broader Topix <.TOPX> index sank 3.4 percent to 1,154.07, despite support by the Bank of Japan, which bought 18.8 billion yen worth of exchange traded funds.

However, while the recent tumult has spooked investors, the benchmark Nikkei is still up 36 percent this year, and has gained 14.5 percent since April 4, when the Bank of Japan announced a sweeping monetary expansion campaign to eliminate years of deflation and revive growth.

> European shares bounce in thin trade, Fiat rallies <.EU> > Yen firms, euro edges up versus dollar in thin trade > Gold rises on physical demand as dollar dips > Brent dips on weak economic data, ample supplies

STOCKS TO WATCH

--FAST RETAILING CO LTD

Fast Retailing, the Japanese operator of the Uniqlo and Theory fashion brands, for now will not sign a legally binding safety pact for factories in Bangladesh, preferring to ramp up its own inspections, the Wall Street Journal reported on Monday.

(Reporting by Dominic Lau; Editing by Shri Navaratnam)

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First Published: May 28 2013 | 4:58 AM IST

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