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Japanese shares reverse early gains ahead of new government formation

10/03/2021 | 11:17pm EST

TOKYO, Oct 4 (Reuters) - Japanese shares reversed early gains on Monday as caution ahead of the formation of a new government and lingering worries over the China Evergrande debt crisis outweighed positive sentiment stemming from a strong Wall Street finish last week.

The Nikkei share average lost 1.14% to 28,441.89 by 0206 GMT, with technology and shipping stocks leading the decline. Earlier in the session, it rose as much as 1.16% after five straight sessions of losses. The broader Topix fell 0.72% to 1,972.09.

"The market started falling as soon as it hit its highest level for the session. This is a typical move when selling pressure is strong," said Tomoichiro Kubota, a senior market analyst at Matsui Securities.

"The market is facing a triple pain now, with signs of Chinese economic slowdown and the U.S. budget issues. Also, we cannot expect similar monetary policies from Japan's new cabinet as we had under the Abenomics."

The Evergrande debt crisis continued to cast doubt over China's economic growth, while the fate of the Biden Administration's flagship spending bills is not clear yet.

Japan's incoming prime minister Fumio Kishida is set to formally take office on Monday and so far, he has failed to impress investors, market participants said.

Chip-making equipment maker Tokyo Electron dragged down the Nikkei the most, with a 3.21% drop. Technology start-up investor SoftBank Group fell 2.52% and robot maker Fanuc lost 3.91%.

Shippers tumbled 8.24%, with Kawasaki Kisen losing 8.59%.

Department store operators rose after Japan lifted its COVID-19 emergency measures last week, with Isetan Mitsukoshi Holdings climbing 4.55%, J.Front Retailing gaining 4.39% and Takashimaya up 3.86%.

Airlines jumped 2.49%. (Reporting by Junko Fujita; Editing by Subhranshu Sahu)

ę Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
CHINA EVERGRANDE GROUP -0.88% 2.25 End-of-day quote.-84.90%
FANUC CORPORATION -0.41% 23045 End-of-day quote.-9.13%
ISETAN MITSUKOSHI HOLDINGS LTD. 5.61% 790 End-of-day quote.29.51%
J. FRONT RETAILING CO., LTD. 4.18% 947 End-of-day quote.16.20%
KAWASAKI KISEN KAISHA, LTD. 12.87% 6140 End-of-day quote.190.72%
SOFTBANK GROUP CORP. -0.71% 5559 End-of-day quote.-31.01%
TAKASHIMAYA COMPANY, LIMITED 4.81% 1024 End-of-day quote.15.71%
TOKYO ELECTRON LIMITED -0.47% 59300 End-of-day quote.54.43%
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