* Nikkei hit by profit-taking after 6 days of gains
* Muted impact from Moody's cut to Japan rating outlook
By Antoni Slodkowski
TOKYO, Feb 22 (Reuters) - Japan's Nikkei average fell 2
percent on Tuesday, away from 9-1/2-month highs and its first
decline in seven days, as turmoil in the Middle East triggered
profit-taking in blue-chip shares.
With the exception of oil and gas shares, all sectors fell as
as investors pocketed profits across the board after the Nikkei's
longest winning streak in over a year.
"Once the market broke below 10,750, where there were call
options lined up, it extended losses, but at the moment it is
just profit-taking triggered by the situation in the Middle
East," said Yumi Nishimura, a senior market analyst at Daiwa
Securities Capital Markets.
She said it was difficult to predict whether the day's
selloff may mean the beginning of a deeper correction for the
Nikkei, which is Asia's best performing index this year, adding
that more trading cues would come from Wall Street when it
reopens on Tuesday after a public holiday.
In Libya, violence has escalated with protests sweeping the
capital Tripoli and anti-government forces reportedly taking
control of the city of Benghazi. Muammar Gaddafi appeared on
state television on Tuesday signalling his defiance and saying he
had not fled a revolt against his 41-year rule. []
By the midday break the Nikkei <> average lost 2
percent, or 213.15 points, to 10,644.38. At one point it fell as
low as 10,639.78 -- its lowest level in almost two weeks.
The broader Topix <> fell 1.8 percent to 957.17.
Market participants played down any short-term impact on the
Nikkei after Moody's Investors Service changed the outlook on the
Japan's Aa2 sovereign rating to negative from stable. Investors
said all eyes are on oil prices and the Middle East, and the
Moody's outlook change only highlights a deep-rooted problem.
HIGH VOLUME
Volume was high with over 1.3 billion shares changing hands
on the Tokyo stock exchange's first section, suggesting that the
day's total will likely come in above last week's daily average
of 2.26 billion and mark a 12th straight day of volume in excess
of two billion shares.
Market players said any immediate effect on stocks from
Moody's move should be limited. However, they said it may have an
impact medium-term if political instability persists.
"The downgrade didn't really affect stocks. It triggered some
selling in Nikkei futures and pushed bank shares even lower, but
oil prices and the situation in the Middle East are much more
serious risk factors," said Hideyuki Ishiguro, a supervisor of
investment strategy at Okasan Securities.
Banking shares <.IBNKS.T>, which have advanced 9.5 percent in
year to date outperforming the broader market's rally, extended
losses in heavy volume after the downgrade.
Mitsubishi UFJ Financial Group <8306.T>, Japan's biggest bank
by assets, fell 3.4 percent to 454 yen and Mizuho Financial Group
<8411.T> lost 3.5 percent to 167 yen.
Blue-chip shares which led advance in recent rally also
succumbed to aggressive profit-taking, with the world's No. 1
automaker Toyota Motor Co <7203.T> falling 2.6 percent to 3,805
yen and electronics maker Hitachi Ltd <6501.T> losing 2.6 percent
to 484 yen.
Bucking the trend was clothing retailer Parco Co <8251.T>
which gained 2.9 percent to 855 yen after Aeon Co Ltd <8267.T>,
Japan's second-largest retailer, said it will take a 12.3 percent
stake in the fashion-oriented shopping mall operator and seek an
alliance with the firm helping to lift its urban presence.
[]
(Additional reporting by Ayai Tomisawa; Editing by Edwina Gibbs)
