* Nikkei sheds 0.8 pct after worst day in 5 mths
* Automakers, financials suffer
* Correction seen short-lived – strategists
By Dominic Lau
TOKYO, April 5 (Reuters) – Japan’s Nikkei average extended
heavy losses made the previous day to fall to a four-week low on
Thursday, hurt by a weak Spanish debt auction and fading hopes
of further U.S. monetary stimulus.
Automakers and financials were under pressure, with Toyota
Motor Corp down 2.4 percent, Honda Motor Co
off 2.9 percent and Japan’s top investment bank Nomura Holdings
losing 2.2 percent.
“We had a lot of shorts yesterday … less today, but nobody
has stepped in to buy. A lot of the markets aren’t open yet, so
it doesn’t really feel like there are the kind of bids in there
to buy stuff,” a senior dealer at a foreign banks.
He said investors would like to see how the Chinese market
reacts after a three-day holiday following disappointing
Australian trade figures which have heightened concerns about
China’s slowing demand for raw materials.
The Nikkei dropped 0.8 percent to 9,738.62, on track
for its third straight losing day after sliding 2.3 percent on
Wednesday, its worst day in five months.
But it is still up 15.2 percent this year, buoyed by a run
of strong U.S. economic data and liquidity boosting programmes
by central banks, and strategists said they expect the current
correction to be short-lived.
“If equities continue to fall, this could encourage global
monetary authorities to adopt a more accommodative stance, thus
preventing a worse share price correction than we currently
envision,” Nomura said in a client note.
Naomi Fink, Japan equity strategist at Jefferies, said a
bear market relapse was not in the offing.
“We remain positive mid-term, and don’t anticipate a
full-scale flare-up of the Greek crisis, another natural
disaster in Japan or a hard landing in China,” she said in a
note.
“Timing-wise, we may be left hanging until the Bank of Japan
speaks (dovishly) again.”
The BOJ will hold a two-day policy meeting next week.
Fink recommended investors avoid shorting stocks that retail
investors like to buy on dips, such as pharmaceuticals,
retailers, information and communications companies, and food
and beverage firms.
Spanish borrowing costs jumped at a bond auction on
Wednesday, raising fears that the euro zone debt crisis may
flare up again and suggesting that the effects of a liquidity
injection that has bolstered risk assets so far this year may be
waning.
Euro zone fears and the Federal Reserve’s indication that it
is less inclined to provide additional stimulus knocked U.S.
stocks, with both the Dow Jones industrial average and
S&P; 500 down 1 percent.
The broader Topix index was down 1 percent at
826.83.
