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Japanese Market Retreats After Bright Start

The Japanese stock market opened on a firm note Monday with a stronger dollar and better than expected results of the June tankan quarterly survey of business sentiment triggering some buying in early trades.

However, stocks retreated soon and pushed the key index Nikkei down into negative territory, with investors turning cautious amid renewed concerns about U.S. stimulus tapering and on a weak report on Chinese manufacturing activity.

The benchmark Nikkei 225 index, which spurted to 13,747 at the start, declined to 13,610 subsequently and is currently trading at 13,630.8, down 46.5 points or 0.3 percent from its previous close.

Japan Steel Works, Sumco Corp., Marui Group, Chiba Bank, Shizuoka Bank, Pioneer Corp. and Unitika are down 2 to 3 percent.

Mitsumi Electric, Fast Retailing, Nitto Boseki, Bank of Yokohama, Mitsui Chemicals, Canon Inc. (CAJ), Nissan Chemical Industries, Inpex Corp., Softbank Corp., Alps Electric, Olympus Corp. and JX Holdings are all trading lower by 1 to 1.8 percent.

Among the gainers, Kajima Corp. is up more than 5 percent, MS&AD Insurance Group, Furukawa, Yaskawa Electric and Mitsui Engineering & Shipbuilding are trading higher by over 4 percent, and Tokyo Dome, East Japan Railway, IHI Corp., T&D Holdings, Daikin Industries and Tokio Marine are up 3 to 4 percent.

Taiheiyo Cement, Mitsubishi UFJ Financial Group, Konami Corp., Japan Tobacco, Dowa Holdings, Mazda Motor, Sony Corp. (SNE), Mitsui OSK Lines and Sumitomo Mitsui Trust Holdings are also up with strong gains.

On the economic front, the index measuring business sentiment in Japan surged in the second quarter of 2012, the Bank of Japan revealed on Monday in its quarterly Tankan business survey.

The large manufacturers index came in with a score of 4, beating forecasts for a 3 and up from -8 in the first quarter. The outlook score was 10, also beating expectations for a 7 and up from -1 in the previous three months.

The large non-manufacturers index was at 12, surpassing expectations for 11 and up from 6 in Q1. The outlook score was 12 versus forecasts for 14 and up from 9 in the three months prior.

Large all-industry capex is now seen at 5.5 percent, well above forecasts for 2.9 percent after falling 2.0 percent in the previous quarter.

In the currency market, the U.S. dollar rose to the mid 99 yen level on the strong tankan survey, after trading in the lower 99 yen range earlier in the day. The yen is currently trading at 99.33 to the U.S. dollar.

Among other markets in the Asia-Pacific region, Australia, South Korea and Taiwan are trading notably lower. Shanghai, Malaysia, New Zealand and Singapore are down with modest losses, while the Hong Kong market is closed for a holiday.

On Wall Street, stocks closed lower after showing considerable volatility over the course of the session on Friday. The major averages spent much of the day bouncing back and forth across the unchanged line.

The Dow declined 114.9 points or 0.8 percent to 14,909.6 and the S&P 500 slid 6.9 points or 0.4 percent to 1,606.3, while the Nasdaq inched up 1.4 points or less than a tenth of a percent to 3,403.3.

Major European markets ended lower on Friday. While the German DAX index dipped by 0.4 percent, the U.K.'s FTSE 100 index and the French CAC 40 index lost 0.5 percent and 0.6 percent, respectively.

U.S. crude oil snapped a four-day gain to settle lower on Friday, as the dollar continued to strengthen against a basket of major currencies on data that consumer sentiment in the U.S. improved much better than previously estimated in June.

Crude for August delivery dropped $0.49 or 0.5 percent to close at $96.56 a barrel on the New York Mercantile Exchange.

by RTTNews Staff Writer

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