12 August 2005, 12:24  Tokyo shares close flat as weaker GDP data spur profit-taking

Share prices finished flat as softer-than-expected GDP data for the April-June quarter prompted some investors to lock-in gains after the benchmark Nikkei 225-stock index surged to a four-year high yesterday, dealers said. The Nikkei 225 index ended down 1.64 points or 0.01 pct at 12,261.68. At one stage, the blue chip marker had risen to 12,324.43. The broader-based TOPIX index of all First Section issues added 1.39 points or 0.1 pct to 1,245.13, off a high of 1,250.71. Decliners beat gainers 932 to 590, with 128 issues unchanged. Volume reached 1.90 bln shares, down from 2.24 bln yesterday. "Investors opted to take profits on the weaker-than-expected GDP headline figures, after share prices here surged rapidly in recent sessions," said Yutaka Miura, chief strategist at Shinko Securities. Before the opening bell, the government reported that the economy grew at only half the expected rate in the June quarter, as an expansion in domestic demand came to a virtual standstill, and a much-awaited upturn in exports failed to counteract this. The economy grew a real 0.3 pct last quarter, or at an annualized rate of 1.1 pct, the Cabinet Office reported. Miura also said that the market succumbed to investors trimming their long positions ahead of the weekend. "Foreign investors stepped up their purchases in domestic-demand-related firms for the past several sessions, but they were also looking for opportunities to lock-in gains. The GDP just provided a good chance for them," said Masayoshi Yano, senior strategist at Tokai Tokyo Research Center. Nonetheless, some investors turned their attention to the more positive aspects of the GDP data, which prompted some bargain-hunting, dealers said. "The figure of GDP growth of 0.3 pct may seen small, but its components are good," said Tatsuya Torikoshi, a senior economist at Daiwa Institute of Research Ltd. He said that the export figures, in particular, are encouraging as they have implications for future capital investment. Among the gainers were non-ferrous metal, non-life insurance, consumer finance and trading house stocks.

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