* Nikkei falls on continued worries about supply chains
* Foreign buying provides some support
* Investors remain wary over nuclear plant developments
By Ayai Tomisawa and Antoni Slodkowski
TOKYO, March 28 (Reuters) - The Nikkei average fell on
Monday after weekend reports of soaring radiation levels at a
damaged nuclear plant, adding to investors' worries over
disrupted supply chains and power cuts already biting into
corporate earnings after Japan's earthquake and tsunami.
The Nikkei found support near the bottom of a narrow
200-point range in which it hovered last week, helped by
ex-dividend date buying and bargain-hunting by foreigners and
short-term investors.
Domestic players kept off-loading holdings in Tokyo stocks
or have already closed positions ahead of the end of the fiscal
year on March 31, putting the market under more selling
pressure.
Japanese shares have lost 8 percent since the earthquake,
tsunami and threat of a nuclear disaster triggered the biggest
two-day rout on the market since 1987. In comparison, MSCI's
index of Asian shares outside Japan has fallen
2.5 percent since the quake.
"There's still room to rise as foreign buying on dips is
likely to continue, although trading may be directionless before
the end of the fiscal year," said Hajime Nakajima, a wholesale
trader at Cosmo Securities.
By midafternoon the benchmark Nikkei had lost 1.1
percent or 108.79 points to 9,427.34. The broader Topix
shed 0.5 percent to 852.74.
Underscoring worries that Japan is in for a long fight to
contain the radiation threat from the stricken Fukushima nuclear
plant on its northeast coast, readings on Sunday showed
contamination 100,000 times normal in water at the plant's
reactor No. 2 and 1,850 times normal in seawater nearby.
"Although investors are alert to news flows related to
changes in companies' full-year forecasts and dividend payouts,
the fundamental mood should not be that bad thanks to foreign
buying," said Yumi Nishimura, a senior market analyst at Daiwa
Securities Capital Markets.
Before the market opened on Monday, foreigners were seen
placing orders to buy a net 14.9 million shares, the ninth
consecutive day of pre-market block buying.
Overseas investors bought a net 891 billion yen ($11
billion) of Japanese stocks in the week following the quake, the
highest since records began in 2005.
Tokyo Gas gained 3.9 percent to 378 yen after the
company hiked its net profit forecast for this business year to
98 billion yen from 71 billion yen on a jump in demand from
factories in January and February and an increase in gas use by
households due to a cold winter.
'MARKETS HATE UNCERTAINTY'
Worries over disrupted supply chains of automakers and DRAM
chipmakers further soured the mood, with Deutsche Securities
slashing its forecasts for major Japanese carmakers assuming a
prolonged production suspension after the quake. []
Automakers have unperformed the fall in the Nikkei in the
two weeks following the quake, with Toyota Motor Corp
down 10 percent and Honda Motor 11 percent lower.
"Markets hate uncertainty. Two weeks on, most assembly
factories remain shut, and it's become increasingly apparent
that the industry will take a long but as yet undefined period
to get back on its feet due to supply chain disruption," Clive
Wiggins, an analyst at Macquarie Securities, said in a note to
clients.
"This open-endedness has fuelled fears for the worst,
resulting in valuation compression."
Bucking the market's negative mood, JFE Holdings Inc
climbed 1.3 percent to 2,393 yen after the Nikkei
business daily reported that its unit JFE Steel Corp will boost
output of materials for temporary housing by about 70 percent by
extending operating hours at a Kobe facility that makes
lightweight steel H-beams.
(Reporting by Ayai Tomisawa; Editing by Michael Watson)
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