Japan's Nikkei share average fell on Monday on global jitters as eurozone policymakers appeared no closer to resolving the region's debt crisis heading into another European summit this week. Weighing on the market was weakness in sectors sensitive to economic conditions, with mining down 3.6 percent and shippers off 2.1 percent.
The Nikkei dropped 0.7 percent to 8,734.62, falling below its five-day moving average at 8,753.04, while the broader Topix ended 0.8 percent lower to 745.22. "On the European side, you have concerns about the summit. It's not if they have not had the repeated chances to get together to talk about this," said Nicholas Smith, Japan strategist at CLSA.
"On the Japanese side, you have got the likely vote on the consumption tax. It might be tense and certainly low volume is suggesting there isn't much commitment from investors until they get these two issues resolved." Domestic media reported the ruling Democrats and the opposition have agreed in principle to vote on Tuesday on a bill aimed at doubling the 5 percent sales tax by 2015.
"The consumption tax talk over the weekend obviously is putting some pressure on the retail space today," a trader said. Isetan Mitsukoshi Holdings Ltd, J.Front Retailing Co Ltd and Bic Camera Inc lost between 1 and 2.4 percent. Trading volume on the Topix was light, at 71 percent of its daily average for the past 90 days.
The Topix's one-month earnings momentum - analysts' earnings upgrades minus downgrades as a percentage of total estimates - turned negative, to 2.3 percent from 0.1 percent last month, Thomson Reuters Datastream data showed, indicating negative sentiment for equities.
The benchmark Nikkei has rallied 6 percent since hitting a six-month low on June 4, but is still down 13.4 percent on the quarter, hurt by concerns about the deepening euro zone sovereign debt crisis and slowing global growth. Telecommunications firm NTT DoCoMo rose 0.9 percent, while peers KDDI and Softbank Corp added 0.4 and 0.3 percent respectively.
Astellas Pharma Inc gained 1.5 percent after the drugmaker received approval for additional use of its Symbicort Trubuhaler drug treatment for adult bronchial asthma in Japan. Gree Inc advanced 1.7 percent and DeNA Co Ltd was up 0.7 percent respectively after Nomura reaffirmed its "buy" rating on the two social gaming companies. But plant engineer Chiyoda Corp fell 3.5 percent to a near three-week low, extending Friday's 3.3 percent drop on concerns that development of the Browse liquefied natural gas project in Australia would be delayed. Chiyoda is part of a joint venture that has been awarded for a front-end engineering and design contract for the onshore component of the project.
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