Roundup: Nikkei falls 1.06 pct as oil glut continues, Fed vague on rate hike

The Nikkei stock index lost 1.06 percent Thursday as investor sentiment was soured by a weak lead from Wall Street overnight as the global oil glut continues and as the U.S. Federal Reserve failed to define its planned interest rate hike, a move seen as definitively signaling the world's largest economy is in good health.

The Nikkei 225 dropped 189.51 points to finish at 17,606.22, while the broader Topix index of all first-section shares fell 1. 14 percent, or 16.34 points, to end the day at 1,413.58.

Local analysts here said that despite the U.S. Federal Reserve saying in a statement that the U.S. economy was expanding "at a solid pace" and citing a boost in employment, the Fed reiterated its stance that it would be "patient" in when it would raise interest rates, a sign that investors took as a negative, as hopes were for a clearer indication of when the Fed plans to raise its benchmark borrowing costs from zero.

The Fed did say, however, it would take into account economies in Europe and Asia when deciding on a timeline for its rate hike, with analysts suggesting that sluggish economies in Asia and inflation issues, coupled with jitters over the health of the eurozone, following Greece's recent geopolitical shift to rewrite its austerity measures, would factor into the Fed's duration of being "patient" henceforth.

"The risks surrounding international developments that the Fed mentions are things like a global economic slowdown or lower inflation as represented by cheaper oil, and geopolitical risks triggered by the fall in oil prices," said Mitsushige Akino, an executive officer at Ichiyoshi Asset Management Co.

As the oil glut continues, with the biggest global distributor Saudi Arabia maintaining recently it has no plans to alter its level of output as U.S. inventories increase, prices for crude fell below 45 U.S. dollars a barrel Thursday, hitting a near six- year low.

In twine with a circumspect reaction to the Fed's statement, economic uncertainty in the eurozone, a continuing slump in global oil prices, and some disappointing earnings reports here, investors' moves were guarded today, brokers said.

Data showing that retail sales in Japan retreated in December last year by 0.3 percent, marking the third successive month of decline, also did little to inspire investor confidence Thursday, with concerns renewed that consumers have yet to fully convalesce from a sales tax hike in last April from 5 to 8 percent, analysts said.

Stocks found traction or lost ground on earnings reports, with budget carrier Skymark plummeting 25 percent to 237 yen, following a day of being largely untreated, as the stock will be delisted from the Tokyo Stock Exchange on March 1, following the company filing for bankruptcy protection.

Skymark had liabilities totaling 71.09 billion yen (603.6 million U.S. dollars) when it filed for bankruptcy and its Chief Executive Officer Shinichi Nishikubo stepped down and was replaced by Masakazu Arimori, a board member, the company said, adding that Integral Corp., an equity firm, will provide the company with finances to help it restructure, pending the Tokyo District Court' s approval.

A weak yen, rising fuel costs at the time, and a dispute over an order with Airbus, threw Japan's their-largest carrier into financial difficulty in July last year. Airbus canceled a deal with Skymark worth 2 billion U.S. dollars to purchase six of its A380 super-jumbos and sued the Japanese carrier for outstanding deposits.

"The company, believing the demands for breach-of-contract payments were unreasonable, attempted to negotiate a reduction in the payments with Airbus but reached a situation in which there were concerns that payment for breach of contract would have worsened the company's financial base," Skymark said.

Other carriers had a better day, however, as falling prices for oil equates to lower fuel costs, and All Nippon Airways gained 0. 89 percent to 328 yen and Japan Airlines rose 1.76 percent to close at 4,040 yen.

Nintendo was a notable decliner Thursday, tumbling 8.66 percent to 11,235 yen, after the video game and console maker predictably announced earnings after the bell saw the firm lower its sales and operating profit forecasts, while showing a leap in net profit in the April-December period to 504 million U.S. dollars.

Canon dropped 5.11 percent to 3,741 yen, after announcing its net income for the April-December period missed median market expectations.

The firm said it expects its group net profit to increase 2 percent this fiscal year from the previous year to 260 billion yen, with its group operating profit rising by 4.5 percent to 380 billion yen on sales of 3.90 trillion yen, an increase of 4.6 percent, but its growth forecast was lower than that achieved by the camera maker in 2014, owing to slowing sales in European markets.

Renesas Electronics, a semiconductor maker, marked a bright spot on the market Thursday, surging 15.11 percent to 853 yen, following an upbeat revision to its earnings outlook.

But Nippon Steel & Sumitomo Metal closed down 1.9 percent at 289 yen, following the steelmaker announcing its net profit slumped more than 20 percent in the nine months to last December, forcing it to slash its full-year profit forecast.

Construction and mining machinery maker Komatsu was another notable decliner, dropping 8.5 percent to 2,366 yen, following Nomura lowering its rating on the stock to "neutral" from "buy."

Chugai Pharmaceutical gained traction however, climbing 5.1 percent to 3,405 yen, as Goldman Sachs lifted its target price on the stock to 3,200 yen from 3,100 yen.

Trading volume on Thursday increased to 2.41 billion shares on the Tokyo Exchange's First Section, up from Wednesday's volume of 2.31 billion shares, with declining issues outnumbering advancing ones by 1,357 to 420. Endi