* Nikkei loses steam after touching 5-week high
* Focus on how long the yen can be kept on defensive
* Investors sell to square positions above 9,600
* Eyes on comments by U.S. Treasury's Geithner, FOMC
TOKYO, Sept 16 (Reuters) - Tokyo stocks inched down after
hitting a five-week high on Thursday as the yen failed to
continue to weaken as much as some market players had hoped after
Japan intervened in the market the previous day to weaken it.
The yen's tumble off a 15-year high against the dollar due to
Japan's first intervention in six years boosted the benchmark
Nikkei <> more than 2 percent on Wednesday, lifting shares
of exporters such as high-tech firms and automakers.
Short-covering continued to lift the stock market earlier on
Thursday, but concerns about how effective Japanese authorities
would be kept the dollar/yen rate in check and that weighed on
share prices.
"The yen's retreat hasn't been as big as the market had hoped
-- dollar/yen has yet to touch 86 yen -- and the yen remains on
the strong side. That weighed on stocks that have been boosted
short-covering. New money isn't really flowing in," said
Mitsushige Akino, chief fund manager at Ichiyoshi Investment
Management Co.
Investors will be watching a series of events in the United
States for further clues on the yen's future performance.
U.S. Treasury Secretary Tim Geithner will testify before the
Senate Banking Committee at 1400 GMT, and the Federal Reserve is
scheduled to hold a policy-setting meeting next Tuesday.
Any criticism from Geithner on Japanese intervention could
spark speculation that Japan may scale back its activity, dealers
said. [] []
"Investors are sceptical about the effectiveness of the
intervention as it was a solo action and the Fed meeting is on
the horizon. If the Fed decides on further quantitative easing,
for example, that would lead the yen to strengthen again," Akino
said.
The dollar traded at 85.33 yen <JPY=>. It had hit a 15-year
low below 83 yen on Wednesday just before Tokyo stepped into the
currency market. []
Repatriation flows by investors and manufacturers sending
overseas earnings back to Japan this month could also nudge the
yen higher against the dollar, one market analyst said.
The benchmark Nikkei fell 0.2 percent or 17.44 points to
9,499.12 after touching a five-week intraday high of 9,620.90.
The broader Topix <> dipped 0.6 percent to 843.64.
Market players said the Nikkei also trimmed gains after
facing stiff selling pressure above 9,600 from investors who had
waited to square large long positions built at that level.
But they said the Nikkei could probe further highs once the
position squaring peters out.
"There are also substantial short positions needing to be
covered at levels around 9,500 and 9,600. Some short-covering
began in futures yesterday and the same could happen in the cash
market," said Kenichi Hirano, operating officer at Tachibana
Securities.
From a technical viewpoint, the focus was on whether the
Nikkei could consolidate its footing above the 75-day moving
average, currently around 9,455.
The benchmark moved above its 75-day moving average for the
first time in four months the previous day, which is seen as a
bullish signal.
The Nikkei moved further into its Ichimoku cloud, an area of
resistance on technical charts, after piercing the bottom of the
cloud on Wednesday. Further resistance is seen at around 9,660,
the top of the cloud. Ichimoku charts are popular with Japanese
traders.
Shares of exporters were mixed, with Sony Corp <6758.T>
rising 1.3 percent to 2,630 yen but Canon Inc <7751.T> falling
0.1 percent to 3,830 yen. Among automakers, Toyota Motor Co
<7203.T> was up 1.3 at 3,050 yen.
(Reporting by Aiko Hayashi; Editing by Michael Watson)
