* Fed to buy more long-term Treasuries; BOJ keeps status quo
* Nikkei breaks below 25-day MA; next support seen at 9,250
* Worry about dlr/yen outlook takes centre state -strategist
By Aiko Hayashi
TOKYO, Aug 11 (Reuters) - Japan's Nikkei average fell more
than 2 percent on Wednesday, hurt by the yen's strength against
the dollar after the Federal Reserve announced plans to boost a
flagging U.S. economy by reinvesting money from maturing mortgage
bonds in government debt.
The U.S. central bank, which left benchmark overnight
interest rates steady in a range of zero to 0.25 percent, also
renewed its pledge to keep rates low for an extended period, as
widely expected. []
In contrast, the Bank of Japan had kept interest rates steady
and held off on new policy steps earlier on Tuesday, saving its
limited policy options for when rises in the yen accelerate
enough to damage a fragile economic recovery. []
"Worries about a further strengthening in the yen against the
dollar grew after the Fed's new steps towards easing policy and
with the Bank of Japan maintaining the status quo," said Masaru
Hamasaki, a senior strategist at Toyota Asset Management.
"Investors are selling on worries about the impact of a
strong yen on corporate earnings. Although earnings reports at
home have been pretty solid, concerns about the future are taking
centre stage. A bearish mood like this isn't something that will
disappear in a few weeks."
The benchmark Nikkei <> lost 2.3 percent or 217.90
points to 9,333.15, while the broader Topix <> fell 2.1
percent to 837.06.
After 9,500 the next support stands at 9,250, where large
numbers of call options are lurking, market analysts say, with
one saying moves could be volatile given the settlement for
Nikkei options on Friday.
The settlement price of Nikkei options is calculated on the
second Friday of every month.
The Nikkei's next targets lie around 9,091, a low hit in
July, and 9,076, a low posted in November 2009.
The Nikkei is trading well below its 25-day moving average,
now at 9,520, which is considered a proxy for a one-month moving
average and is closely watched in Japan. That had provided
support to the index since late July.
The dollar hovered within sight of a 15-year low versus the
yen. In early Asia trade, the dollar slipped to 85.37 yen <JPY=>
on trading platform EBS, near 84.82 hit last November.
Market players said caution ahead of a series of Chinese
economic figures including the consumer price index weighed on
investor appetite, after its trade data raised concerns that
domestic demand was cooling faster than thought while inflation
might creep up in July.
The data, issued as Tokyo stock market began its midday
break, showed annual growth in China's industrial output in July
slowed to 13.4 percent from 13.7 percent in June, while CPI rose
0.4 percent between June and July after a 0.6 percent drop in
June. []
EXPORTERS DOWN
The Tokyo market fell broadly, with shares of exporters such
as Honda Motor Co <7267.T> hit particularly hard due to the yen.
Many Japanese exporters have set their currency rate
assumptions around 90 yen per dollar for the financial year to
next March, although Honda cut its assumption to 87 yen from 90
yen. A stronger yen eats into exporter profits when repatriated.
Honda skidded 2.8 percent to 2,793 yen, Canon Inc <7751.T>
lost 2.3 percent to 3,580 yen and Sony Corp <6758.T> shed 2.1
percent to 2,626 yen.
Shares of Pacific Metals Co <5541.T> tumbled 6.9 percent to
619 yen after the producer of ferronickel cut its annual sales
and profit forecasts on Tuesday, saying the price of nickel was
lower than its initial expectations.
But Dainippon Screen Manufacturing <7735.T> climbed 3.3
percent to 434 yen after the company, which manufactures
chip-making equipment, lifted its operating profit forecast for
the year to March 2011 to 19.5 billion yen ($228.5 million) from
11 billion yen, citing recovering demand in China and other Asian
markets.
($1=85.34 Yen)
(Additional reporting by Elaine Lies; Editing by Michael Watson)
