Nikkei flat after rally, lingering Fed optimism supports
* Market cautious over overbought signs in Japanese shares * Underlying mood still positive on lingering Fed optimism - analysts * Sumitomo Precision soars on report to develop shale gas equipment By Ayai Tomisawa TOKYO, June 20 (Reuters) - Japan's Nikkei share average was flat in choppy trade on Friday as investors booked profits from the previous day's rally, but the mood remained upbeat on lingering optimism the U.S. Federal Reserve will keep interest rates low for some time to come. The Nikkei was flat at 15,360.63 in mid-morning trade after opening lower and flirting with positive territory. The index jumped 1.6 percent to a 4-1/2-month high of 15,361.16 on Thursday after the Fed expressed confidence about the U.S. economic recovery and re-committed to its super-loose policy. Analysts expect the underlying mood to remain positive for now. "The good mood is still lingering," said Kyoya Okazawa, head of global equities at BNP Paribas. "Not just foreign investors but also long-term domestic investors like pension funds have been buying as well." Over the short term, however, investors will be cautious about building up positions as there are signs the market is overbought, he said. The Nikkei is trading nearly 4 percent above its 25-day moving average of 14,814.11. The Japanese economy is also facing a period of uncertainty after a sales tax hike in April, especially with exports staying soft at a time when consumption is being crimped. On the day, exporters were mixed, with Toyota Motor Corp rising 0.4 percent, Advantest Corp shedding 0.3 percent and Canon Inc falling 0.2 percent. Bucking the trend, Sumitomo Precision Products Co jumped 3.5 percent after the Nikkei business daily reported that the company plans to develop equipment for shale gas exploration and aims to boost sales of the shale gas business by 60 percent to more than 20 billion yen in three years. The broader Topix rose 0.1 percent to 1,269.91, while the new JPX-Nikkei Index 400 was flat at 11,553.57. (Editing by Shri Navaratnam)
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