Nikkei Falls After Piercing 11,000, Earnings In Spotlight
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TOKYO (Reuters) – Japan‘s Nikkei share average dropped on Monday as investors took profiton exporters as they awaited further cues from corporate earnings after the index briefly pierceda fresh 32-month high above 11,000 in early trade.The Nikkei fell 0.9 percent to 10,824.31 after initially leaping to 11,002.86 as interest inJapanese exporters was fanned as the yen dropped to 91 versus the dollar, promising higheroverseas revenues once they are repatriated.The Nikkei has gained about 25 percent since mid-November on hopes that Japan’s newprime minister, Shinzo Abe, will pursue aggressive policies to beat the country’s prolongeddeflation, including pressuring the central bank for further monetary easing.Analysts said sharp rallies in the Japanese market are merely backed by expectations, andcompanies have yet to prove that their fundamentals have recovered, thus the market is proneto a correction.“We haven’t seen the numbers yet. The market is seen having reached its upside as it isrunning ahead of the reality…investors at domestic institutions remain cool about companies’fundamentals,” said Yutaka Yoshino, chief technical analyst at SMBC Nikko Securities.But Yoshino said that the Japanese market is expected to rise further in the long term if thecurrent weak yen trend continues.“The recent rally is just the start of a long-term rise. The market has yet to recover from itspre-Lehman levels (of above 12,000),” Yoshino said.Despite the recent rallies, the Nikkei remains well below the 2008 financial crisis while theStandard & Poor’s 500 Index and Germany’s benchmark stock index have both alreadyexceeded that level.Yoshino added that the Nikkei was expected to breach the 12,000-level around April-June asthe effects of a weaker yen would start filtering through to corporate bottom lines then.Reflecting this prospect, Sony Corp outperformed most exporters, jumping 9.1 percent afterCitigroup raised its rating to “buy” from “neutral”, saying the softer yen has enabled Sony totake more risks on operations such as the home appliance business.Exporters lost ground on profit-taking as the yen’s weakness against the dollar paused after1 / 3