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Tokyo: Nikkei falls as China data, BOJ tankan outlook dent mood

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[TOKYO] Japan's Nikkei tumbled on Friday, led by SoftBank and other large-cap stocks, hit by a dull futures and options expiry and worrisome economic indicators from China and Japan.

The Nikkei share average dropped 2.0 per cent at 21,374.83. The index had climbed 3.2 per cent, or 668 points, in the last two days. The broader Topix dropped 1.5 per cent to 1,592.16.

For the week, the Nikkei fell 1.4 per cent.

China's November industrial output grew 5.4 per cent from a year earlier and retail sales rose 8.1 per cent, missing forecasts, official data showed on Friday.

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Among large-cap stocks, SoftBank Group Corp stumbled 4.6 per cent, Fanuc shed 3.2 per cent and Tokyo Electron plunged 5.5 per cent.

"Today's selling seems a bit overdone so it is likely that those who expected that the Nikkei futures would settle higher are selling these large Nikkei components on disappointment," said Naoki Fujiwara, a fund manager at Shinkin Asset Management.

Traders also noted that US-China trade tensions are expected to drag on, pulling down cyclical stocks such as tech and machinery makers. Advantest Corp declined 2.7 per cent, TDK Corp shed 2.0 per cent and Kyocera Corp declined 2.5 per cent.

On Thursday, US Commerce Secretary Wilbur Ross told Bloomberg TV that China will need to do more than what it has promised so far to ease trade tensions.

"The market is really sensitive to headlines now. It can lose 100 or 200 points on a single headline and can retrieve the same amount on an other headline," said Shoji Hirakawa, chief global strategist at Tokai Tokyo Research Institute.

Foreign investors sold a net 600.1 billion yen (S$7.26 billion) worth of Japanese cash stocks in the first week of December, marking a fourth straight week of selling, data from Japan Exchange Group showed. The figure was the second biggest for the year.

Traders also noted that sentiment soured after the Bank Of Japan's tankan survey showed that large Japanese manufacturers' sentiment index for the outlook worsened for the first time in three quarters.

They added that concerns about US-China trade tensions and the outlook for the US economy as well as a slowdown in China demand are likely to linger.

Japan Display Inc jumped 35 per cent after the company said that it is in talks with outside parties including Chinese companies about alliances, though nothing has been decided.

REUTERS