Money markets have priced in a quarter-point rate hike later Wednesday, down from half a point previously and 75 basis points before that. "For the moment, the market's focus is on the outlook for monetary policy, and if the U.S. economy will have a soft or hard landing," Maki Sawada, a strategist at Nomura Securities, said in a briefing with journalists. Eighty-two of the Nikkei's 225 constituents rose, while 137 fell and six remained unchanged. Tokyo Gas topped the Nikkei, gaining 5.48%, followed by chip-making equipment maker Screen Holdings , which added 5.12%, and electronic-components maker Alps Alpine , which rose 5.06%, all after announcing financial results. Housing materials maker TOTO led losers, dropping 8.37%, followed by office equipment manufacturer Seiko Epson's 5.83% slide, also after earnings announcements. The risk of earnings downgrades is likely to keep Japanese stocks heavy in the first half before a rebound at the tail end of the year once global business confidence improves, partly as China's economy gathers pace, said Yoko Arai, chief global investment strategist at Mitsubishi UFJ Morgan Stanley Securities. At current levels, the Nikkei "is still a little bit cheap relative to fundamentals," she said. "Still, sentiment is very negative, so it will take time for a full recovery." (Reporting by Kevin Buckland; Editing by Uttaresh.V and Dhanya Ann Thoppil)
By Kevin Buckland
TOKYO, Feb 1 (Reuters) - Japan's Nikkei share average
shed early gains to end little changed on Wednesday as caution
took hold of the market before a crucial U.S. Federal Reserve
policy decision later in the day.
At the same time, there was a wide split between the big
winners and losers as investors reacted to domestic earnings
reports.
The Nikkei finished 0.07% higher at 27,346.88, after gaining
as much as 0.81% to 27,547.67 earlier in the session, a
one-and-a-half-month high.
The broader Topix slipped 0.15% to 1,972.23, giving
up early gains.
Both the Japanese stock benchmarks initially rallied
following gains of more than 1% for each of the big-three Wall
Street indexes after data showing a slowdown in the pace of
labour cost rises in the United States added to the case for a
slowing of aggressive Fed policy tightening.
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