Roundup: Nikkei falls 1.27 pct on yen's rise, lackluster U.S. data

The Nikkei stock index fell 1.27 percent to a near-two-week closing low Tuesday as the yen's comparative strength against its major counterparts pressured export-related issues, and overall sentiment soured after the United States reported less-than-stellar manufacturing activity.

The Nikkei 225 dropped 222.19 points to finish the day at 17, 335.85, while the broader Topix index of all first-section shares lost 1.16 percent, or 16.36 points, to end at 1,392.39.

Traders here said that investors remained in a largely risk-off mood following U.S. data from the Institute for Supply Management (ISM) showing its national factory activity index fell to 53.5 in January, from 55.1 in December, with a reading above 50 indicating expansion and that below the 50 mark signaling contraction.

Despite still charting above the 50 boom-or-bust line and hence still technically expanding, analysts said the pace was slower than expected and the implications significant for the wider economy.

Added to this, they said, was separate data from the U.S. Commerce Department, which also helped to sour the market mood Tuesday.

The data showed that consumer spending, which accounts for more than 30 percent of U.S. economic activity, dropped 0.3 percent in December, after posting gains of 0.5 percent in November, and U.S. household purchases also slumped the most since September 2009 in December, other data showed.

Hiroaki Hiwada, a strategist at Toyo Securities Co., said that the ISM data being released just after disappointing U.S. GDP data, was detracting from some good economic indicators for the world's biggest economy, such as the current job situation.

"The ISM report wasn't great, making investors reluctant to buy assertively before the U.S. jobs data comes out on Friday," Hiwada said.

The market swung in and out of negative territory for much of the day as higher oil prices gave energy firms a boost, but battered issues related to air transportation and rubber-related issues.

Oil continued its rise having hit a near-six-year low last week, with West Texas Intermediate crude gaining 0.9 percent to 49.99 U. S. dollars and Brent crude for March delivery gaining 18 U.S. cents to 54.93 U.S. dollars.

In currency market, meanwhile, the U.S. dollar was changing hands at 116.96 yen, compared with 117.64 yen logged in New York.

Subsequently, exporter issues lost ground, with Toyota reversing 1.4 percent to 7,550 yen and Honda Motor Co. losing 2.9 percent to 3,593 yen.

Canon Inc., for its part, who relies on overseas sales for around 80 percent of its total revenue, lost 1.2 percent to end the day at 3,669 yen.

Energy shares found favor as oil prices rose and oil exploration giant Inpex leapt 6.9 percent to 1,381 yen, while oil- services provider JGC Corp. added 4.5 percent to 2,476 yen.

JX Holdings Inc., meanwhile, jumped 3.2 percent to finish at 452 yen and Japan Petroleum Exploration gained 2.8 percent to end at 3,700 yen.

Tokyo-based Cosmo Oil advanced 3.8 percent to 165 yen and JX Holdings added 3.2 percent to close at 452 yen.

But rubber-related issues weighed on the market Tuesday, with tire maker Bridgestone slumping 3.3 percent to 4,480 yen and Toyo Tire & Rubber Co. falling 4.4 percent to close at 2,592 yen.

Airlines and shipping lanes also came under pressure due to rising fuel costs, and Japan Airlines fell 5.2 percent to 3,720 yen, while ANA Holdings Inc. relinquished 1.6 percent to close at 315 yen.

Nippon Yusen KK, one of the world's biggest shippers, sank 4.6 percent to end at 332 yen.

Trading volume on Tuesday rose to 2.75 billion shares on the Tokyo Exchange's First Section, up from Monday's volume of 2.29 billion shares, with declining issues outnumbering advancing ones by 1,454 to 334. Endi