TOKYO, Jan 25 (Reuters) - Japan's Nikkei index touched a
five-month low on Tuesday, weighed down by investor caution over
the situation in Ukraine and a potential faster-than-expected
U.S. rate hike ahead of the Federal Reserve policy meeting due
later in the day.
By 0213 GMT, the Nikkei share average fell 1.9% to
27,061.36, after dropping as much as 2.1% to 27,006.37, its
lowest since Aug. 20. The broader Topix lost 2.02% to
Wall Street bounced back from a steep sell-off to close
higher overnight, with bargain hunters pushing the indexes into
a positive territory.
Investors are keenly watching every move of the U.S. Fed as
the central bank will begin its two-day meeting later on
Tuesday, with investors starting to speculate that there is a
small possibility that they will announce a surprise rate hike.
In a sign that geopolitical tensions are heating up, NATO
announced it was putting forces on standby to prepare for a
potential Russian invasion of Ukraine.
"Investors became cautious after seeing the steep falls on
Wall Street last night, and they became even more sensitive to
declines in U.S. futures today," said Shoichi Arisawa, general
manager of the investment research department at IwaiCosmo
"The market will remain like this until the FOMC (Federal
Open Market Committee) is over but after tomorrow, with the
earnings season kicking off, investors will start hunt for
stocks with good earnings."
Technology stocks dragged the Nikkei lower, with start-up
investor SoftBank Group losing 3.53%, chip-making
equipment maker Tokyo Electron falling 2.36% and
air-conditioner maker Daikin Industries dropping 2.58%.
All the 33 industry sub-indexes on the exchange were trading
in the red, with shippers leading the losses with a
Nihon M&A Center Holdings tanked 10% after the
broker for mergers and acquisitions for small firms delayed its
Defense-related stocks advanced amid tension between Russia
and NATO, with Ishikawa Seisaku jumping 6.08% and Howa
Machinery rising 0.77%.
(Reporting by Junko Fujita, additional reporting by Tokyo
markets team; Editing by Sherry Jacob-Phillips)