CORRECTED-Nikkei steps back on profit-taking after long rally
(Correcting the length of period of longest rally in the lead) * Profit-taking set in after 12-day rally until Monday * Market mood still strong on hopes on earnings, higher returns * Interest rate sensitive shares drop, real estate firms worst hit By Hideyuki Sano TOKYO, June 3 (Reuters) - Japanese shares slipped on Wednesday as investors booked profits from the market's longest rally in nearly three decades, with interest rate sensitive stocks sold the most after bond yields rose globally. The Nikkei share average fell 0.5 percent to 20,449.20 . The market had rallied for 12 straight sessions until Monday, its longest winning streak since 1988. "The long rally was getting exhausted. Some correction is due, and is unsurprising. Things don't move up in a straight line," said Stefan Worrall, director of equity at Credit Suisse. "The mood here is still very positive in terms of the earnings outlook of Japanese companies. The yen is on a long-term weakening path and we could see it easily break new lows within the next few months. That is also positive for the market." A rise in Japanese and the world bond yields hurt interest rate-sensitive stocks, such as real estate companies and power companies. Real estate companies were the worst performer among the Tokyo Stock Exchange's 33 subindustry index, falling 1.9 percent. Mitsubishi Estate fell 2.0 percent while Mitsui Fudosan dropped 1.8 percent. Power companies were also a target for profit-taking after their big gains in recent weeks. Chubu Electric Power, Japan's biggest power company by market cap, fell 3.7 percent. Investors were taking profits ahead of key events in global markets, including ongoing talks between Greece and creditors over its rescue programmes, the European Central Bank's policy meeting on Wednesday, and the U.S. jobs data on Friday. Still, many market players think Japanese shares will likely be supported by hopes Japanese companies will boost shareholder returns through share buybacks and higher dividend. A weaker yen is also expected to prop up exporters' bottom lines, helping companies such as Komatsu and Honda . They rose 0.6 percent and 1.7 percent, respectively on Wednesday. The yen hit a 12 1/2-year low of 125.07 yen to the dollar on Tuesday although it has bounced back to around 123.93. Few traders were eager to test the downside given that the Bank of Japan has committed itself to buying 3 trillion yen of stock ETFs (exchange traded funds) a year and the country's biggest pension funds all plan to increase stock holdings. The broader Topix fell 0.3 percent to 1,668.96 while the JPX-Nikkei Index 400 shed 0.3 percent to 15,072.85. (Editing by Simon Cameron-Moore)
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