Roundup: Tokyo stocks close lower on falling hopes of steep Fed rate cut

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TOKYO, July 8 (Xinhua) -- Tokyo stocks closed lower Monday, tracking declines late last week on Wall Street, as expectations the U.S. Federal Reserve would steeply cut its interest rate dropped owing to better-than-expected jobs data.

The 225-issue Nikkei Stock Average lost 212.03 points, or 0.98 percent, from Friday to close the day at 21,534.35.

The broader Topix index of all First Section issues on the Tokyo Stock Exchange, meanwhile, dropped 14.18 points, or 0.89 percent, to finish at 1,578.40.

Tokyo stocks followed their U.S. counterparts' lower as U.S. non-farm payrolls data released late last week for June coming in better than expected, diminished prospects for the U.S. Federal Reserve to significantly cut its interest rate later this month.

Market strategists here said that stocks had been bought recently based on expectations for a half-point cut in its interest rate by the Fed, to underpin the U.S. economy as it faces headwinds. They added, however, that expectations for such a steep cut had receded following the jobs data.

Akira Tanoue, a senior strategist of the investment research department at Nomura Securities Co., said, "Those who have bought stocks on hopes for a half-point cut started to look at a quarter-point rate reduction."

The Japanese government saying that core private-sector machinery orders had dropped in May from a month earlier for the first time in four months, added to a risk-off market mood, brokers here also said.

Orders in the recording month declined 7.8 percent from the previous month, with the total orders, excluding those for ships and from utilities because of their volatility, coming to 842.9 billion yen (7.77 billion U.S. dollars), the Cabinet Office here said Monday.

Machinery orders are a key advance indicator for corporate capital spending and the government uses the data to predict the strength of business spending in a six to nine month period ahead.

Machinery makers duly retreated on the latest data, with Komatsu losing 0.9 percent, while Sumitomo Heavy Industries closed 1.3 percent lower.

But banking-oriented issues found favor on the likelihood the Fed will not cut borrowing costs as much as initially thought, and Sumitomo Mitsui Trust Holdings edged up 0.2 percent, while Mizuho Financial Group closed 0.6 percent higher.

By the close of play, farm and fishery, pharmaceutical, and textile and apparel-linked issues comprised those that declined the most, and issues that fell outpaced those that rose by 1,676 to 402 on the First Section, while 69 ended the day unchanged.

On the main section on Monday, 1,078.38 million shares changed hands, rising from Friday's volume of 933.15 million shares.

The turnover on the first trading day of the week came to 1,695.3 billion yen (15.63 billion U.S dollars). Enditem

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