Japanese stocks slip on Greece, Fed anxiety; Toyota in focus
* Greece default fears hit sentiment * Investors take profits in recent gainers such as banks * Toyota AGM big market focus on controversial class share plan By Hideyuki Sano TOKYO, June 16 (Reuters) - Japanese stocks slipped on Tuesday as Greece teetered on the brink of a default, while investors kept a wary watch for clues on the timing of U.S. rate increases as the Federal Reserve begins its two-day policy-setting meeting later in the day. The focus locally was on Toyota Motor's annual shareholder meeting, where some foreign investors are opposing the carmaker's controversial plan to issue hybrid shares. The Nikkei share average fell 0.7 percent to 20,248.45 while the broader Topix dropped 0.5 percent to 1,642.93, having lost steam after hitting an eight-year high at the beginning of this month. "The Japanese economic recovery is gaining momentum so the market could have gone up but a correction in overseas equity markets is weighing," said Masayuki Kubota, chief strategist at Rakuten Securities. Global share prices were pressured on concerns over Greece and the Fed's policy outlook. Greece and its creditors hardened their stances on Monday after the collapse of talks, prompting Germany's EU commissioner to say the time had come to prepare for a "state of emergency". Investors sold recent gainers such as financial shares to take profits, with SMFG falling 2.2 percent and Mizuho Financial 1.6 percent. Nomura Holdings fell 1.4 percent. Given the uncertain global backdrop, domestic demand-oriented small cap shares were preferred over large companies with global exposures. Topix core of 30 big companies fell 0.8 percent while the Topix Small dipped just 0.3 percent. With hopes of corporate governance reforms fueling a rally in Tokyo equities in recent months, many investors will be closely scrutinising annual general meetings of local firms in the next two weeks. Toyota's meeting is attracting particular attention because of its controversial plan to issue hybrid shares aimed at long-term holding by retail investors. Some foreign investors believe the plan will undermine the power of ordinary shareholders. "I'm optimistic overall but frustrated by the emergence of this issue," said Nicholas Smith, Japan strategist at CLSA. Some other investors took a more sanguine view. "I don't really see the instrument undermining corporate governance. Markets should enable companies to broaden their financing options - it's a two way street," said Hannah Cunliffe, senior portfolio manager at Union Investment, based in Frankfurt. Toyota shares were down 0.8 percent in early trade. (Additional reporting by Tomo Uetake; Editing by Shri Navaratnam)
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