Nikkei falls to 3-week low as oil prices tumble, strong yen hits sentiment

miércoles 10 de diciembre de 2014 22:12 GYT

* Hedge fund money flow taking toll on Japanese
    * Futures, options settlement Fri may spark
    * Topix all 33 sub-sectors fall

    By Ayai Tomisawa
    TOKYO, Dec 11 (Reuters) - Japan's Nikkei share average is
set for a third day of losses on Thursday, hitting a more than
three-week low after oil prices slumped, while a strong yen and
poor machinery data dampened risk taking.
    The Nikkei benchmark dropped 2.0 percent to
17,069.70 in mid-morning trade after slipping as low as
17,043.63 earlier, the lowest since Nov. 17. It fell 2.3 percent
on Wednesday. 
    Brent settled down 3.9 percent at $64.24 a barrel
after plumbing $63.56, its lowest since July 2009 on signs of
oversupply and waning demand. 
    Traders say that falling oil prices are positive for most
advanced economies such as the United States and Japan as they
are importers of oil, but weak oil prices are hitting some oil
exporters particularly hard.
    They added that hedge funds, which make investments across
asset classes including commodities, have faced headwinds this
year and were taking profits from assets that have been rising.
    "In order to cover losses incurred by falling oil prices,
hedge funds are reversing short positions on the yen and taking
profits from markets and stocks that have been rising, including
the Nikkei," said Norihiro Fujito, senior investment strategist
at Mitsubishi UFJ Morgan Stanley Securities.
    "Although falling oil prices are positive for Japan in the
mid-to-long term, hedge funds' money flow is taking a toll on
the Japanese market in the short term."
    Fujito said that news a big hedge fund was closing its
commodities fund also added to concerns.
    A source told Reuters earlier this month that Brevan Howard,
one of the world's biggest hedge fund managers, was shutting its
commodities fund due to losses after a rout in the commodities
market this year. 
    Also hurting sentiment was Japan's core machinery orders,
which fell 6.4 percent in October from the prior month, down for
the first time in five months. 
    Market observers said the market may stay volatile before
Nikkei futures and options contracts settle on Friday.
    Exporters were sold after the dollar fell as far as 117.70
yen, continuing to pull back from a seven-year peak of
121.86 set on Monday. Toyota Motor Corp fell 2.1
percent, Sony Corp dropped 3.6 percent and Panasonic
Corp slid 2.7 percent.
    Falling oil prices sent Inpex Corp and engineering
company JGC Corp lower, which shed 3.0 percent and 3.2
percent, respectively. 
    The broader Topix fell 1.4 percent to 1,387.39, with
all 33 sub-sectors in negative territory. The JPX-Nikkei Index
400 declined 1.3 percent to 12,594.03.

 (Editing by Jacqueline Wong)