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Nikkei lower on money supply issues

Tuesday, February 19 07:27:07

Japan's Nikkei share average edged down today as Japanese Finance Minister Taro Aso played down talk of foreign bond buying by the central bank, while index heavyweight Fanuc Corp dropped on weak machine tool orders from China.

Analysts said that the Japanese market's rise had steadied while the yen's fall had lost momentum as investors grew wary of taking large positions until there was clarity on Bank of Japan's next governor.

Investor sentiment soured on Tuesday after Finance Minister Taro Aso told a news conference he was not considering foreign bond purchases for monetary stimulation.

His comments sent the dollar as low as to 93.56 yen, with exporters losing ground as investors assessed how far a new BOJ governor could practically expand monetary stimulus.

"The appointment of the new governor will somewhat determine the direction of the Nikkei for the short term," said Takuya Takahashi, an analyst at Daiwa Securities. The Nikkei dropped 0.3 percent to 11,372.34, after jumping 2.1 percent on Monday to near a 4-year high struck on Feb. 6.

Economy Minister Akira Amari said on Tuesday the government will decide on the Bank of Japan's new governor and two deputies after Prime Minister Abe returns from a trip to the United States over Feb. 21-24.

Daiwa's Takahashi added that in the longer term, the appointment should have a limited impact on the market, with most investors convinced that whoever takes the job will have to implement an easy monetary policy under Abe-led government.

Index heavyweight Fanuc weighed on the benchmark after the Japan Machine Tool Builders' Association said machine tool orders to China had dropped 65 percent in January compared to the previous year. (C) Reuters