Nikkei stabilises after selloff, market cautious before U.S. payrolls

Tokyo - Japanese stocks got some respite from two days of sharp falls on Friday morning, as investors bought index heavyweights such as SoftBank Corp and futures although trading was subdued ahead of the looming US jobs data.

The Nikkei tacked on 0.2 per cent to 15,207.83 in mid-morning trade after falling earlier.

The benchmark dropped 3.6 per cent in the past two days, and is on track to post a 3.1 per cent fall this week, the first weekly decline in a month.

SoftBank Corp rose a modest 0.2 per cent but was the most traded stock by turnover, while Fast Retailing Co added 0.1 per cent and was the eighth most traded stock.

Nomura NFNikkei Avg Leverage Index Link ETF rose 0.7 per cent and was the second most traded stock.

"Most investors are either selling or staying on the sidelines today, but some foreigners are buying index-heavyweights as they believe that the Nikkei is on an uptrend in the mid-to-long term," said a chief portfolio manager at a Japanese asset management firm.

Trading was choppy as investors cautiously awaited the US payrolls report for November later Friday.

The jobs data could strengthen or weaken the case for the Federal Reserve to begin tapering its monthly debt purchases of $85 billion at its policy meeting on Dec. 17 and 18, analysts said.

The Topix gained 0.1 per cent to 1,230.60.

"After huge drops in the past two days, investors are comfortable with buying back Japanese shares," said Yoshiyuki Kondo, a market analyst at Daiwa Securities.

"But at the same time, the yen's rise is making them wary." The dollar dropped to 101.71 yen and further away from the week's high of 103.37.

"Volatility in the currency market has kept investors on the edge, so some investors tend to stay away from betting on exporters at the moment," Kondo said.

Currency-sensitive exporters were mixed after suffering in the previous day. Toyota Motor Corp dropped 0.2 per cent, Honda Motor Co Ltd gained 1.3 per cent, and Sony Corp rose 0.7 per cent.

Still, the benchmark Nikkei has risen about 46 per cent this year, gunning for its best yearly performance since 1972 helped by the Japanese government's massive fiscal and monetary stimulus to revive the economy.