* China tightening hits Nikkei poised for profit-taking
* Resource shares slip as commodity prices fall on China worry
* Nikkei's RSI at 72, indicating benchmark is overbought
* JAL drops by daily limit, but broader market impact slight
By Aiko Hayashi
TOKYO, Jan 13 (Reuters)- Japan's Nikkei average fell 0.9
percent on Wednesday, hurt by profit-taking and a strong yen,
while resource shares slipped after China's decision to start
tightening monetary conditions sparked concerns the move might
slow demand.
China surprised world markets by raising banks' reserve
requirements, the strongest of a series of step towards
tightening monetary policy, in response to increasing concerns
about its economy overheating. []
"The Japanese stock market had become overheated following a
big rally since December. On top of that, we now have China's
decision to raise banks' reserve requirements," said Tsuyoshi
Segawa, an equity strategist at Mizuho Securities.
"It's hard to think the move would hinder China's economic
recovery, but the news likely led some risk money to close
positions for now."
The benchmark Nikkei <> shed 98.62 points to 10,780.52
after closing at a 15-month high on Tuesday. The broader Topix
<> dipped 0.6 percent to 948.52.
Analysts noted that the Nikkei, which is hovering around
15-month highs, had been overbought and was poised for
profit-taking even before the China news broke after Tokyo market
hours on Tuesday.
The Nikkei's relative strength index (RSI) on Tuesday rose to
72. Over 70 is considered overbought territory, so market players
said some downward adjustment -- particularly in resource shares,
which have gained recently -- was only natural.
CHINA-LINKED STOCKS DOWN
The China move spurred selling in shares of metal stocks as
commodities prices fell on concern that the country's purchases
of natural resources might slow, while construction machinery
firms, which have a big presence in China, also came under
pressure.[] []
Ferronickel producer Pacific Metals <5541.T> lost 4.3 percent
to 688 yen, smelter Toho Zinc <5707.T> declined 2.9 percent to
464 yen and fellow smelter Dowa Holdings <5714.T> shed 3.5
percent to 524 yen.
Komatsu Ltd <6301.T>, the world's second-biggest maker of
earth-moving machinery, slid 2.5 percent to 2,043 yen and Hitachi
Construction <6305.T> fell 2.3 percent to 2,508 yen.
Both gained sharply just a day before following strong
Chinese data that boosted expectations of strong demand.
Toyota Motor Corp <7203.T> and other exporters slipped after
the dollar fell more than 1 percent against the yen on Tuesday.
It was roughly flat at 91.05 yen <JPY=> on Wednesday.
Toyota retreated 1 percent to 4,075 yen, while electronics
parts maker Kyocera Corp <6971.T> slid 1.8 percent to 8,360 yen.
Japan Airlines <9205.T> tumbled to a record low of 7 yen, the
second consecutive day it has fallen by its daily limit of 30
yen, on growing expectations the airline is headed for bankruptcy
and a delisting from the Tokyo exchange, but analysts said its
impact on the overall market was negligible. []
Best Denki Co Ltd <8175.T> plunged 18.3 percent to 282 yen
after the consumer electronics retailer said its full-year net
loss is likely to be more than 20 times bigger than previously
forecast, as it plans to book charges from closing up to 30
percent of its stores and from folding its struggling subsidiary.
(Editing by Edwina Gibbs)
