10Aug11

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Nikkei to fall after Wall Street tumbles on Europe debt jitters

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The Nikkei average is set to resume falling on Thursday following a rebound the day before, after rumors about the health of French banks re-ignited concerns over the euro zone's debt crisis and sent U.S. stocks down more than 4 percent.

Banks and other financials, already trading well below book value, are poised to lead losses on the Nikkei after rumors about the financial health of Societe Generale (SOGN.PA), which the bank denied, triggered a selloff in European and U.S. banks.

Speculation that France's AAA rating may be at risk also rattled markets, though the three major agencies reaffirmed the top-tier rating and said the outlook remains stable.

"We're looking to the downside today again, but as there has been much less volatility on the Nikkei than on Wall Street, falls will likely be limited," said Yumi Nishimura, a senior market analyst at Daiwa Securities.

Nishimura added that apart from banking stocks, exporters may also come under renewed pressure as the yen continues to hover near record highs against the dollar. The dollar last traded at 76.74 yen, not far from a record low of 76.25 yen.

SocGen was the weakest of the major French banks in Europe's stress test of its lenders last month. Investors have speculated it may have to raise about 3 billion euros to reach new global capital standards if the euro zone crisis worsens.

Nikkei futures in Chicago ended at 8,815, down 205 points from their Osaka close of 9,020.

Analysts expect the Nikkei to trade between 8,700 and 9,000.

The Nikkei snapped a three-day losing streak on Wednesday and closed up 1.1 percent at 9,038.74, while the broader Topix .TOPX gained 0.8 percent to 776.73, after Wall Street surged on the Federal Reserve's pledge to keep rates near zero for another two years.

[Fuente: Reuters, Tokyo, 10Aug11]

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