| GEO Business | | Nikkei falls 1pc, nears 6-month low | Updated at: 1115 PST, Wednesday, June 09, 2010
TOKYO: Japan's Nikkei average fell 1 percent on Wednesday, moving toward a six-month low as investors worried about whether Europe can tackle its debt woes after Fitch Ratings said the UK faced a "formidable" fiscal challenge.
Honda Motor, which has just settled one strike in China, dropped 2.8 percent as another strike at a supplier there moved into its third day, prompting the carmaker to suspend production at two local car plants.
Investors were keen to see if a key support line for the Nikkei below 9,400 will hold, saying tests of that level will be a useful indication of the market's future direction.
"Worries about Europe's finance problems remain strong, and these issues are perceived as a risk factor that could lead to a strong yen," said Hiroaki Kuramochi, chief equity marketing officer at Tokai Tokyo Securities.
European shares fell on Tuesday, hitting a near two-week closing low, after Fitch said Britain faced a "formidable" challenge to cut government borrowing and needs more ambitious plans to reduce the deficit over the medium term.
Kuramochi said traders in Tokyo were also talking about the news about Bulgaria.
European Commission Economic and Monetary Affairs Commissioner Olli Rehn said the commission was concerned about the quality of Bulgarian statistics and wants to send a mission there when Eurostat gets new auditing powers.
By the midday break, the benchmark Nikkei had slipped 93.79 points to 9,444.15, in sight of a six-month low of 9,395.29 hit on May 27. The Nikkei's relative strength index fell to around 34. A level of 30 and below is considered oversold.
The broader Topix fell 0.7 percent to 851.99.
The euro slipped 0.3 percent from late U.S. levels to 109.22 yen after gaining 0.5 percent on Tuesday.
A wide range of Japanese stocks fell, with blue-chip stocks leading the slide. Canon Inc shed 1.8 percent to 3,625 yen and Sony Corp slipped 1.9 percent to 2,560 yen.
Honda fell to 2,621 yen, with some in the market saying that foreign investors were likely selling the stock on worries about the impact of the strike on its earnings.
But industrial robot maker Fanuc rose 1.3 percent to 9,680 yen after the Nikkei business daily reported the company plans to boost its output of industrial robots by nearly 70 percent to a record 2,500 units a month by autumn. |  |
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