RTTNews - With not so encouraging employment data from the U.S. hurting sentiment to an extent and investors opting to take profits after six successive days of gains, the Japanese stock market is exhibiting weakness on Thursday. A sharp pull back in commodity prices on the back of a decline in crude and metal prices is also contributing to the weakness this morning.

The U.S services sector contracted for the eighth straight month in May. And the employment data from the world's biggest economy has also turned out to be a bit disappointing.

The Nikkei average, which fell to 9,654.55 in early trading, has recovered lost ground on bargain hunting at lower levels at a few counters. The benchmark index is currently down by just 5.73 points at 9,735.94.

Shares of machinery, automobile, bank, real estate and trading companies are exhibiting weakness. However, most of the stocks from these sectors are trading well off their morning lows now.

Construction, foods and chemicals stocks are mostly trading lower. Oil, steel and non-ferrous metals are also down in the red.

Pharma stocks are exhibiting a mixed trend. Insurance and communications stocks are seen attracting some buying.

In company news, Hitachi Construction Machinery Co. will raise about 20 billion yen through a public straight bond issuance for institutional investors as early as this month. It will be the firm's first such issuance in more than ten years. Through this issue, Hitachi Construction is looking to raise its long-term-debt ratio to enhance its financial soundness as well as procure funds for capital spending.

In December, the maker of hydraulic shovels filed a shelf registration of up to 50 billion yen. The initial issuance will be worth 20 billion yen -- most likely in the form of five-year bonds -- with the value and timing of subsequent issuances to be decided after gauging investor interest. The stock is currently trading lower by around a per cent from its previous close.

Nippon Steel Corp. expects to see its earnings bottom out in the April-June quarter and nearly break even in the July-September period, having extracted concessions from major buyers of products in the latest round of price negotiations. The steelmaker expects to post a 100 billion yen group pretax loss for first half ending September 30. The firm plans to raise the capacity utilization rate at steel mills from about 50% now to 60-70% as early as July to meet increasing demand and is also aiming to swing to a roughly 100 billion yen pretax profit in the second half ending March 31, 2010, shooting to break even for the full fiscal year. The company's stock is currently trading in the red with a modest loss.

In economic news, according to the quarterly survey by the Ministry of Finance, Japanese business investment fell by 25.3% from a year earlier during the January-March period, marking the eighth straight quarter of decline. Economists closely watch the capital investment figure because the government will use it in revising the preliminary first-quarter gross domestic product data, which showed a record 15.2% contraction at an annualized pace. Corporate investment in factories and equipment account for around 15% of Japan's GDP.

The survey showed a marked 70.1% drop in pretax profits on year, marking the seventh straight quarter of decline. Sales, meanwhile, fell 20.4% on year, for the fifth straight quarter of decline. The Cabinet Office plans to release revised GDP data on June 11.

In the currency market, the U.S. dollar traded around the lower 96 yen line early Thursday in Tokyo, little changed from its levels overnight in New York. Currently, the yen is trading at 96.34 to the U.S. dollar.

Among other markets in the Asia-Pacific region, Australia is down in the red with its benchmark indices losing over 1.5%. Shanghai, New Zealand, Korea and Taiwan are down with modest losses, while Singapore is trading slightly lower.

On Wall Street, stocks snapped a four-day winning streak on Wednesday as traders chose to take profits on the back of some discouraging economic data. Despite some late buying, the Dow closed down 65.63 points or 0.8 percent at 8,675.24, the Nasdaq closed down 10.88 points or 0.6 percent at 1,825.92, and the S&P 500 fell 12.98 points or 1.4 percent to 931.76.

In the Asia-Pacific region, most of the markets finished modestly higher on Wednesday. Japan's benchmark Nikkei 225 Index rose by 0.4 percent, while Hong Kong's Hang Seng climbed by 1 percent.

Major European markets closed notably lower. The U.K.'s FTSE 100 Index fell by 2.1 percent, while the French CAC 40 Index and the German DAX Index closed down by 2.0 percent and 1.7 percent, respectively.

Oil prices dropped sharply on Wednesday amid an Energy Information Administration report that inventories were unexpectedly higher last week. A discouraging employment report also renewed demand concerns.

Light sweet crude settled at US$66.12 a barrel, down US$2.43 on the session. Prices dropped as low as US$64.95 in mid-day trading.

With more economic data to flow in and the U.S. Fed Chief to come out with his comments on financial markets and monetary policy, traders may well choose to stay cautious in today's session.

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