* Japan PM, BOJ gov talked on phone on forex -Sengoku
* Need to study details but reaction looks muted -analyst
* Closing of funds on econ worries hurting stocks -analyst
* Buying by pension funds seen supporting Nikkei -analysts
By Aiko Hayashi
TOKYO, Aug 23 (Reuters) - Japan's Nikkei average fell 0.4
percent on Monday, dented by what some market players said was
selling by hedge funds and foreign investors amid worries that a
strong yen would derail a fragile economic recovery and lingering
fears about global economic growth.
After the market closed for the midday break, Chief Cabinet
Secretary Yoshito Sengoku said Prime Minister Naoto Kan and Bank
of Japan Governor Masaaki Shirakawa talked by phone on Monday
about currencies and the economy and agreed to work closely.
[]
Markets had been rife with speculation that the BOJ might try
to pre-empt government pressure for action and further loosen its
already ultra-easy policy at an emergency meeting before or
shortly after an expected meeting between Shirakawa and Kan.
"Investors will need to further study the content of their
talk, but at the moment the reaction in markets looks pretty
muted ... the impact of domestic factors on stock moves has
become limited these days," said Hajime Nakajima, deputy general
manager at Cosmo Securities.
"Rather, a growing trend seems to be that signs of a weak
global economic recovery are prompting some funds to close, and
cash-out moves as a result of that are weighing on stocks. That
money is likely flowing into U.S. bonds and JGBs."
The benchmark Nikkei <> slipped 38.37 points to
9,141.01. It fell 2 percent on Friday and was down 0.8 percent on
the week, for a second straight negative week.
The broader Topix <> fell 0.4 percent on Monday to
826.30.
U.S. stocks inched down on Friday on persistent concerns that
the recovery has tapered off. []
But analysts said the Nikkei was likely supported by buying
by domestic players such as pension funds as it fell as low as
9,098.37 at one stage in morning trade.
The 9,000 to 9,100 area is seen as strong support after
serving as support several times last year, and several attempts
this month to break through on the downside to a fresh 13-month
low have been checked just under 9,100.
If the Nikkei broke below 9,000 the next support would lie at
8,697, a 61.8 percent retracement of the rally between its March
2009 low and April 2010 high.
Analysts say steps to stem the yen's rise are crucial for the
Nikkei. In Asian trade the dollar was lower at 85.36 yen <JPY=>.
It hit a 15-year low of 84.72 yen this month.
"Governments around the world are allowing their currencies
to weaken, and if Japan doesn't do anything about the strength in
the yen it could appreciate further and that would put pressure
on Japanese stocks," said Masahiko Sato, an executive director at
Nomura Securities' equity marketing department.
EXPORTERS DOWN
Canon Inc <7751.T> slipped 2.1 percent to 3,525 yen and Tokyo
Electron Ltd <8035.T> shed 1.8 percent to 4,290 yen. Honda Motor
Co <7267.T> fell 1.4 percent to 2,780 yen.
Fuji Electric <6504.T> fell 3.6 percent to 214 yen after
Mitsubishi UFJ Morgan Stanley Securities cut its rating to "3"
from "2" and lowered the target price to 230 yen from 320 yen,
citing weak short-term recovery prospects.
But shares of Nippon Yusen <9101.T> and other shipping firms
climbed after the Baltic Exchange's main sea freight index
<.BADI> rose to its highest in two months on Friday.
Nippon Yusen gained 0.3 percent to 346 yen and Kawasaki Kisen
K.K. <9107.T> rose 0.6 percent to 342 yen.
Takara Leben Co <8897.T> climbed 2.1 percent to 430 yen after
the condominium developer lifted its group net profit forecast to
4 billion yen ($46.72 million) for the current year to next March
from the previously projected 3 billion yen due to improving
profitability in its apartment sales.
($1=85.61 Yen)
(Editing by Michael Watson)
