* Fast Retailing tumbles on bleak f'cast, drags down Nikkei
* Tests support level seen at 25-day moving average
* Support from expectations of FX intervention, Fed easing
* Earnings season eyed, but hopes not high in Japan -analyst
By Aiko Hayashi
TOKYO, Oct 12 (Reuters) - Japan's Nikkei average fell 2
percent on Tuesday, dragged lower by a climb in the yen to fresh
15-year highs against the dollar and a surprisingly weak profit
forecast from popular stock Fast Retailing <9983.T>.
The benchmark extended its slide as the yen advanced further
in the afternoon, although the risk of another round of
intervention seemed to have grown after Japan weathered a flurry
of weekend G7 and IMF meetings with hardly any criticism of its
recent yen sales.
"Worries about further strength in the yen spurred hedge
selling in futures," said Hiroaki Kuramochi, chief equity
marketing officer at Tokai Tokyo Securities, adding that markets
had yet to see any significant change in comments from Japanese
authorities since the dollar fell below 82 yen.
And while earnings hopes appear to have boosted U.S. stocks
after Alcoa Inc's <AA.N> third-quarter profit beat Wall Street
estimates last week, sentiment in Tokyo is weaker.
"Earnings hopes appear to be supporting U.S. stocks after
they kicked off the earnings season with a relatively upbeat note
such as Alcoa," said Yumi Nishimura, deputy general manager at
Daiwa Securities Capital Markets.
"By contract, expectations aren't really high in terms of
earnings reports so far in Japan, although the reporting season
won't get into full swing until later this month."
Despite early gains on the back of climbs in global equities
after weak U.S. jobs data strengthened the case for more stimulus
from the Federal Reserve, the benchmark Nikkei <> shed
197.24 points to 9,391.64.
The broader Topix <> dropped 1.9 percent to 823.46
Still, market players said expectations of currency
intervention by Japanese authorities and further asset buying by
the Federal Reserve to support the U.S. economy will likely mean
that the Nikkei would not fall much further.
In Asia trade, dollar/yen hit the day's low of 81.85 yen
<JPY=> on the electronic trading platform EBS, and is now trading
at 81.94 yen, coming back under pressure as earlier
short-covering faded, traders said. It logged a 15-year low of
81.37 on Monday. []
Market players see the Nikkei's 25-day moving average as a
major technical support level, which now stands at 9,425, while
its 26-week moving average at 9,680 is seen as the next
resistance.
After that, the Nikkei's next upward targets stand near its
recent peaks around 9,700 hit this month and 9,800 hit in July.
Fast Retailing, the operator of the Uniqlo clothing chain,
forecast its first annual profit fall in four years on tough
competition and higher costs, sending its shares down more than 9
percent. []
It lost 9.1 percent to 11,260 yen.
(Editing by Edwina Gibbs)
