Roundup: Nikkei falls 0.49 pct as BOJ downgrading inflation outlook sends yen higher

The Nikkei stock index fell 0.49 percent Wednesday as the yen strengthened following the Bank of Japan's decision to stay pat on its monetary policy while slashing its inflation outlook, which soured the market mood.

The Nikkei 225 dropped 85.82 points to close at 17,280.48, while the broader Topix index of all first-section issues lost 0. 50 percent, or 7.02 points, to finish the day at 1,390.61.

Japan's central bank held off on any fresh easing measures, traders here said, which was already widely expected by leading economists, but the bank opted to slash its inflation forecast for fiscal 2015 to one percent from 1.7 percent previously, citing the recent oil glut and crude's tumbling prices.

In addition, brokers here said that investors were also in more than a circumspect mood, ahead of the European Central Bank's (ECB) policy meeting, at which it is largely expected that the bank will announce a fresh round of quantitative easing measures, to address the inflation concerns in the single currency region.

"The BOJ's announcement accelerated profit-taking, which investors were already doing because of sharp gains yesterday. It' s hard to aggressively take a position at the moment ahead of the ECB meeting," said Hiroaki Hiwada, a strategist at Toyo Securities Co.

Other analysts looked at the BOJ's downgrading of its inflation forecast as further evidence that the bank will be unlikely to hit its lofty inflation target of 2.0 percent in two years, with the deadline already approaching early next year.

They said that the bank's outlook created an air of disappointment on the market floor, despite the announcement's inevitability.

"The stock market expected the outcome, but it seems some currency traders were hoping for some additional easing. They bought the yen after being disappointed, which dealt a blow to shares," said Tsutomu Yamada, a market analyst at kabu.com Securities Co.

The yen duly retreated in currency markets Wednesday, falling to 117.62 per U.S. dollar in Tokyo, compared to 118.80 yen logged in New York.

As such, exporters, who rely on a weaker yen to boost profits made overseas when they're repatriated, as well as count on the weaker currency to augment profit outlooks and provide the firms with a competitive price edge in foreign global markets, lost ground on Wednesday.

Top automaker Toyota reversed 0.92 percent to 7,588 yen, even though the firm announced that it had sold more than 10.2 million vehicles last year, ahead of both General Motors and Volkswagen, to retain its title as the world's biggest carmaker.

Consumer electronics bellwether Sony climbed 5.48 percent to close at 2,597 yen, after reports stated the company is looking to lose around 1,500 local workers as part of a restructuring initiative, while Sharp fell 2.6 percent to end at 221 yen, after a news report stated that the electronics maker will cut production of display panels for smartphones by around 40 percent, as sales in China experience a downturn.

Dai-Ichi Life, Japan's third-largest insurer, slumped 3.4 percent to 1,572 yen, while MS&AD Insurance Group Holdings Inc. also closed in negative territory Wednesday, dropping 2.9 percent to end at 2,676 yen.

Electrical equipment maker Fujikura dropped 4.5 percent to 472 yen, following reports in the local press stating the company's operating profit likely fell 40 percent, owing to slowing car production in Japan, affecting the sales of cable makers.

Video game and toy maker Konami marked a particular bright spot on the market, leaping 6.8 percent to end the day at 2,144 yen, after Goldman Sachs raised its rating on the firm's stock from " neutral" to "buy."

Trading volume on Wednesday increased to 2.18 billion shares on the Tokyo Exchange's First Section, up from Tuesday's volume of 2. 13 billion shares, with declining issues beating advancing ones by 1,312 to 466. Endi