Nikkei benchmark falls

Japan's benchmark Nikkei slipped on Thursday ahead of an Italian debt sale that could prove challenging in thin volumes, while the euro's tumble against the yen to a 10-year low pressured exporters. Elpida Memory, Japan's last remaining player in the dynamic random-access memory chip market, sank as much as 10 percent after a report said it may delay paying back 30 billion yen ($385 million) in public funds.
The chipmaker underperformed the Nikkei average, which fell 0.3 percent to 8,398.89, taking cues from declines in US and European shares as well as a broad fall in the euro on renewed concerns over the eurozone sovereign debt crisis. The broader Topix reversed earlier losses and gained 0.1 percent to 722.12.
The sale of 8.5 billion euros of Italian bonds later in the day was in focus, as market players looked to see the outcome of Rome's first long-term debt sale since the European Central Bank offered cut-price loans to entice banks to buy debts of struggling eurozone governments. The euro hit a one-year low of $1.2887 and a 10-year trough against the yen on Thursday.
Japanese exporters with substantial exposure to Europe came under pressure. Canon Inc dropped 0.4 percent and industrial robot maker Fanuc lost 0.5 percent. Sony erased earlier losses and ended up 0.1 percent. Financial shares were steady, supported by buying from investment trust funds also known as Toshin funds, traders said. Japan's banking subindex edged up 0.4 percent.
Volume on Tokyo's main board remained thin, with 973 million shares changing hands, edging up from Tuesday's 807.2 million shares - its lowest level in seven years. The benchmark stayed trapped between two technical levels, struggling to top the 25-day moving average around 8,468 but held above 8,363 - the 61.8 percent retracement of its rally from late November to early December. For next year, market participants recommended sectors such as infrastructure, home building and building materials, citing expected reconstruction demand after the March earthquake and tsunami.
The Topix construction subindex is down 1.7 percent this year, faring better than the broader Topix and the Nikkei, which have fallen 20 and 17.9 percent respectively. Despite this year's better performance, the construction sector had a 12-month forward price-to-earnings ratio of 11.6, only slightly more expensive than the Topix's 11.4.