Nikkei falls on hawkish Fed minutes, weaker exports hammer machinery firms

  • Reuters
  • Stock Market News
Nikkei falls on hawkish Fed minutes, weaker exports hammer machinery firms

* Japan export data drags machinery makers

* Banks, insurers outperform on rising U.S. yields

By Ayai Tomisawa

TOKYO, Oct 18 (Reuters) - Japan's Nikkei fell on Thursday in choppy trade, as hawkish minutes from the U.S. Federal Reserve's last policy meeting knocked global sentiment and a surprise decline in exports hit machinery makers.

The Nikkei share average .N225 dropped 0.5 percent to 22,720.88 at the midday break, after opening a tad higher.

The index has fallen around 7 percent since its 27-year peak hit on Oct. 2, as concerns around rising debt yields and worries about the slowing Chinese economy gripped equity markets world-wide.

On Wednesday, the Fed's minutes for its September meeting showed all policy makers agreed to raise key interest rates for a third time in 2018 with many open to further hikes. are reminded about the reasons for last week's selling and they've become guarded against those negative risks again," said Shogo Maekawa, a global market strategist at JPMorgan (NYSE: JPM ) Asset Management. "Caution against rising yields will likely cap the Japanese market's upside for a while."

Machinery makers were battered after economic data showed Japan's exports unexpectedly fell in September from a year earlier, the first decline in 22 months. exporters, especially factory automation equipment makers, which are already been under pressure on worries about slowing demand in China, were particularly hit. Yaskawa Electric 6506.T tumbled 5.9 percent and Fanuc Corp 6954.T plunged 4.3 percent.

Machine tool makers also declined, with Okuma Corp 6103.T tanking 5.2 percent, Makino Milling Machine 6135.T dropping 3.9 percent and Tsugami Corp 6101.T falling 1.9 percent.

"There may be a technical rebound in these stocks, but they may stay basically weak as long as worries about the Chinese economy persist," said Chihiro Ohta, general manager at SMBC Nikko Securities.

Banks and insurers, which hunt for higher-yielding products, found support after U.S. Treasury yields rose overnight.

Mitsubishi UFJ Financial Group 8306.T gained 0.8 percent, T&D Holdings 8795.T soared 1.4 percent and Sompo Holdings 8630.T added 0.4 percent.

The broader Topix .TOPX declined 0.2 percent to 1,709.71. (Editing by Sam Holmes)

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