Nikkei hits 5-month closing low on US worries

The Nikkei stock average marked its lowest close since March 15 on Monday as worries about the US economy offset signs that the Japanese authorities stand ready to quell any further yen strength.

The index fell as low as 8,619.21, breaking below the intraday low of 8,656.79 set on Aug. 9, but holding above the March 15 closing low of 8,605 hit in the wake of the March 11 earthquake and tsunami.
"The next downside target would be 8,600, but we aren't seeing big moves these days, as investors remain cautious," said Nagayuki Yamagishi, an investment strategist at Mitsubishi UFJ Morgan Stanley Securities.
Market participants will continue to closely monitor foreign exchange markets for clues as to whether finance officials will ask the Bank of Japan to intervene and sell yen, to protect the profits of exporters such as Toyota Motor Corp and Canon Inc.
The BOJ could also consider easing monetary policy further, possibly at an emergency meeting before next month's rate review, if further rises in the yen push down Tokyo stock prices enough to hit business sentiment, sources said.
But in the meantime, bargain hunting could limit the downside, as analysts said Tokyo stocks remained undervalued compared with their global peers.
Firms listed on the Tokyo Stock Exchange's first section had an average price-to-book-value ratio under one, which is usually an indication they are oversold.
"It's easy to buy Japanese stocks with such cheap valuations, and this gives the market some support," said Hiroichi Nishi, general manager at SMBC Nikko Securities.
The benchmark Nikkei fell 1% to 8,628.13. The broader Topix index dropped 1.2% to 742.84.
About 2.0 billion shares changed hands on the Tokyo Stock Exchange's main board, above last week's average daily volume of 1.7 billion shares. US recession fears

Market players are increasingly on edge about the possibility that Japan may intervene in the wake of the dollar's slide to a record low around 75.95 yen Friday.

Finance Minister Yoshihiko Noda said on Monday that authorities would take decisive action against speculative moves in the currency markets, signalling Tokyo's readiness to intervene to check yen strength.
A prolonged period of yen strength could force big manufacturers to ratchet down their profit outlooks, and a spate of downward revisions would hurt sentiment which is already fragile due to fears about the economic outlook in Japan's key export markets.
Shares of camera and office equipment maker Canon trimmed gains but were still up 0.9% at 3,495 yen, while rival Nikon Inc erased gains and skidded 0.9% to 1,596 yen. Other exporters fell, with Toyota Motor Corp dropping 2.5% to 2,700 yen.
Investors were awaiting a speech by Federal Reserve Chairman Ben Bernanke on Aug. 26 in Jackson Hole, Wyoming, for signs as to how policymakers plan to handle the turmoil in financial markets and for any hints that more US easing might be ahead.
On Friday, US stocks fell after Hewlett-Packard's weaker outlook and corporate shakeup added to uncertainty for investors.
In Tokyo on Monday, Inaba Seisakusho gained 3.7% to 842 yen. The producer of steel storage units raised its operating profit estimate on Friday for the year ended July 31 to 470 million yen (USD 6.2 million) from 60 million yen, as cost-cutting offset the impact of higher steel prices.
Resort Trust climbed 2.4% at 1,242 yen after Daiwa Capital Markets raised its rating on the membership hotel operator to "outperform" from "hold", citing better-than-expected business at its hotel restaurants.
(USD 1 = 76.245 Japanese Yen)