Reuters: Most Read Articles: Nikkei drops 2.6 pct to hit 3-mth low after Greek polls

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Nikkei drops 2.6 pct to hit 3-mth low after Greek polls May 7th 2012, 03:15 Sun May 6, 2012 11:15pm EDT * Nikkei sheds 2.6 pct on euro zone worries, U.S. jobs * Strengthening yen weighs on exporters * Financials fall, with Nomura shedding 6.7 pct * Gree, DeNA sink on report of possible regulatory clampdown By Dominic Lau TOKYO, May 7 (Reuters) - Japan's Nikkei average fell to a three-month low on Monday after elections in France and Greece raised concerns on whether euro zone economies will continue to pursue austerity measures and as U.S. jobs data came in weaker than expected. The Nikkei was down 245.99 points, or 2.6 percent at 9,134.26 by the midday break, breaching below its 52-week moving average near 9,158 but holding above its 200-day moving average near 9,066. It traded at its lowest since Feb 15. The broader Topix index was down 2.5 percent on Monday. "It's red all over the place. It's pretty bad," a trader at a U.S. bank said, adding that concerns over the euro zone and slowing growth in the United States triggered yen buying, which further weighed on Japanese exporters. Mobile social gaming companies Gree Inc and DeNA Co Ltd were standout losers, both shedding more than 20 percent after a media report that Japan's consumer agency may clamp down on online games that have gambling aspects. Naomi Fink, Japan equity strategist at Jefferies, however, said the sell-off in Japanese stocks could offer buying opportunities for long-term investors, provided a Greek government can be formed in the next several days. "From valuation perspective, yes. There is also a potential for Japanese companies to ramp up production ahead of summer peak demand period now that Japan's nuclear reactors are all down," she said. "There could be opportunity in the near term ... But the Greek situation is a bit of a concern." Greek voters enraged by economic hardship caused by the terms of an international bailout turned on ruling parties in an election on Sunday, putting the country's future in the euro zone at risk and threatening to revive Europe's debt crisis. The Topix index has fallen 9.5 percent in the second quarter after rallying more than 17 percent in January-March to log its best first quarter performance in 24 years. As the index pulls back, Topix's 12-month forward price-to-earnings ratio slips to 12.1 from this year's peak of 13.5 hit in early March, according to Thomson Reuters Datastream. The U.S. S&P 500 carries a 12-month forward P/E of 12.6, slightly more expensive than the Japanese index. Trading volume on the main board after the halfway point was light, at 41 percent of its full daily average for the past 90 days. EXPORTERS, FINANCIALS SUFFER Exporters that were taking a beating on Monday included Honda Motor Co, Toyota Motor Corp and Sony Corp, which shed between 3 percent and 4.8 percent. Financials also suffered as investors cut their exposure to risky assets. Nomura Holdings, Japan's top investment bank, sank 6.7 percent, insurer Tokio Marine Holdings dropped 4 percent and lender Sumitomo Mitsui Financial Group lost 2.9 percent. French voters also ousted incumbent Nicolas Sarkozy, a key architect of bailouts for indebted countries and an advocate of austerity measures, in a presidential election on Sunday, with winner Francois Hollande promising to start a pushback against German-led austerity policies. Adding to the political uncertainty in Europe, U.S. employers cut back on hiring in April, spurring concerns the world's largest economy is losing momentum. Shun Maruyama, chief Japan equity strategist at BNP Paribas, said he expected Japanese equities to rally in June or July, however, led by short-covering, after a correction in May. He said the short-selling ratio of 25.5 percent in April was approaching the critical point of 28-30 percent, when investors are more likely to cover their bearish bets. (Editing by Ramya Venugopal) Link this Share this Digg this Email Reprints

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