Japan's Nikkei stock average fell 0.9 per cent on Wednesday as profit-taking and a strong yen hit exporters such as Kyocera Corp,while resource shares slipped after China's central bank started tightening monetary conditions. China's central bank signaled in its open market operations on Tuesday that it was tightening monetary conditions at a faster-than-expected pace in response to increasing concerns about its economy overheating,a move that came after Tokyo market hours. "The impact of the Chinese move is primarily psychological,with these steps being done mainly to deal with an asset bubble,and I don't think it should be taken too negatively," said Takashi Ushio,head of the investment strategy division at Marusan Securities. "But with the world getting increasingly dependent on the Chinese economy,it's easy to have something like this rattle markets." Analysts noted that the Nikkei,which on Monday hit a 15-month high of 10,905.39,had been overbought and was poised for profit-taking even before the news broke after Tokyo market hours on Tuesday. "Numerous technical indicators indicate that the Nikkei has been overbought," said Hiroichi Nishi,general manager at the equity division of Nikko Cordial Securities. The benchmark Nikkei shed 97.22 points to 10,781.92 after closing at a 15-month high of 10,879.14 on Tuesday. The broader Topix dipped 0.4 per cent to 950.03. The Nikkei's relative strength index (RSI) on Tuesday rose to 72. Over 70 is considered overbought territory,so market players said some downward adjustment - particularly in resource shares,which have gained recently - was only natural. Japan Airlines tumbled to a record low of 7 yen,the second consecutive day it has fallen by its daily limit of 30 yen,on growing expectations the airline is headed for bankruptcy and a delisting from the Tokyo exchange,but analysts said its impact on the overall market was negligible. Adding to the negative tone was a fall on Wall Street,where the S&P 500 snapped a six-day rising streak. Best Denki Co Ltd plunged 19.7 per cent to 277 yen after the consumer electronics retailer said its full-year net loss is likely to be more than 20 times bigger than previously forecast,as it plans to book charges from closing up to 30 per cent of its stores and from folding its struggling subsidiary.
