CORRECTED-Nikkei falls after U.S. and German data sour mood; Fed eyed
(Corrects percentage decline in index and actual level in paragraph 5) * Strong retail sales lifts Seven & i, Aeon * Takeda soars after punitive damages slashed in Actos case * Fujifilm extends gains, but fund manager says its core business uncertain By Ayai Tomisawa TOKYO, Oct 28 (Reuters) - Japanese stocks fell Tuesday morning after Canon Inc tumbled on weak earnings and soft global data offset upbeat domestic retail figures as investors waited cautiously for the outcome of a two-day U.S. Federal Reserve policy meeting. Sentiment was partially supported by data showing Japanese retail sales in September rose 2.3 percent from a year earlier - the strongest increase since March. It helped drive up Seven & i Holdings Co and Aeon Co 1.0 percent and 0.6 percent, respectively. Outperforming the market was Takeda Pharmaceutical Co , which rose 2.6 percent after a U.S. judge slashed a $9 billion punitive damages award to $36.8 million against it and Eli Lilly & Co over their Actos diabetes drug. On the downside, Canon slid 3.2 percent and was the fourth most traded stock by turnover after its quarterly operating profit fell by a fifth as demand for digital cameras slumped. The Nikkei share average shed 0.8 percent to 15,264.74 in mid-morning trade after rising 0.6 percent higher to close at the highest level since Oct. 9 on the previous day. The flash services sector U.S. Purchasing Managers Index compiled by Markit slipped to 57.3 in October from 58.9 in September, hitting its lowest level since April, while Germany's headline Ifo number fell for the fifth straight month in September. Analysts said that some investors are pulling back as the index has moved closer to its immediate resistance level of 15,452, the 50 percent Fibonacci retracement on the drop to a low marked on Oct 17 from a high marked on Sept 25. "Positive retail data is helping some retail stocks, but not strong enough to affect the whole market as investors are focused on the big overseas event now," said Takuya Takahashi, a strategist at Daiwa Securities. The Fed is expected to announce the end of its quantitative easing programme after its policy meeting starting later in the day and is likely to reinforce its stated willingness to wait a long while before hiking interest rates. Fujifilm Holdings Corp extended its gains into a third day on continued fears about the deadly Ebola virus. It rose 2.2 percent to 3,775 yen, moving closer to a six-year high of 3,800 yen marked on Oct 7. "Short-term players are trying to make quick buck on the stock, but to look at this stock logically, its pharmaceutical business still accounts for a small portion of its sales," said a fund manager at a Japanese asset management firm. Fujifilm's subsidiary makes influenza drug Avigan, which has been drafted to the fight against Ebola. It said on Monday it would buy 49 percent of a U.S. vaccine maker which has expertise in manufacturing vaccines used against pandemic influenza, Ebola and other public-health threats. Exporters languished after the dollar eased to 107.83 yen , retreating from Monday's near three-week peak of 108.38. Toyota Motor Corp fell 0.3 percent and Honda Motor Co declined 0.8 percent. The broader Topix dropped 0.2 percent to 1,251.70, and the JPX-Nikkei Index 400 also slipped 0.2 percent to 11,391.99. (Editing by Shri Navaratnam)
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