Nikkei hits five-week low

Japan's Nikkei average fell to a five-week low on Thursday, breaking below a key support level after an overnight rise in oil prices and uncertainty about the Middle East sparked futures selling. The charts are pointing to further losses for the market, but some analysts stressed that bargain hunters would buy on dips if any positive news emerges from the Middle East, leaving the near-term outlook blurry.
Chip-linked shares underperformed the overall market after Wall Street's semiconductor index fell 3 percent, hit by a weaker outlook from Texas Instruments. With the settlement of Nikkei 225 futures and options coming up on Friday, market players pointed to commodity trading advisers in futures, who have sparked big swings in the benchmark recently, as responsible for exaggerated losses - the biggest on the day among Asian bourses.
The benchmark Nikkei ended the day down 1.5 percent, or 155.12 points, at 10,434.38. It fell to a five-week low, breaking below its 13-week moving average, a key support level, after data showed China ran a surprise trade deficit of $7.3 billion in February, triggering some jitters about the outlook for global growth and pushing Chinese stocks lower.
The broader Topix index fell 1.4 percent to 930.84. Investrust's Fukunaga also said that any decisive break below immediate support at the Nikkei's year-to-date low of 10,237.92 may trigger further selling. Defensive stocks with high dividend yields, including utilities such as Tokyo Electric Power which added 0.5 percent to 2,153 yen, outperformed ahead of the March ex-dividend date.
Tokyo Electron dropped 2.3 percent to 5,160 yen and Sumco declined 2.9 percent to 1,450 yen, in the wake of Texas Instruments' weaker outlook. Osaka Securities Exchange Co jumped 6.9 percent to 460,000 yen. The bourse and the Tokyo Stock Exchange plan to start talks as early as this month about a possible business integration, a source familiar with the matter said on Thursday.
Market observers said that, although the immediate impact on the Nikkei was limited, the news could boost sentiment in the long run. Volume was thin, with 1.95 billion shares changing hands on the Tokyo stock exchange's first section, below last week's average daily volume of 2.2 billion shares. Declining shares totalled 1,436, far outnumbering advancing shares at 158.