RTTNews - The stock market in Japan ended in negative territory on Tuesday, as investors paused for profit taking following the recent rally. Insurance stocks led the declines after a local newspaper reported that the proposed merger of Nipponkoa Insurance is facing stiff opposition. Concerns that the recent rally in stock indices does not reflect the intrinsic worth and weak sentiment across the other Asian markets also impacted trading with traders preferring to adopt a wait-and-watch approach and lock in recent gains, following fresh concerns about the pace and magnitude of global economic recovery.

In the U.S., no major economic reports were released on Monday and traders utilized the opportunity to take some profits in morning session. However, speculation about a near-term recovery in the world's largest economy lured investors towards some selective buying, propping up the markets in a late-stage rally, enabling the indices to end mixed around the unchanged line.

The Dow finished up by 1.36 points or 0.02% at 8,764, the Nasdaq dipped by 7.02 points, or 0.4% to 1842.40, and the S&P 500 fell 0.95 points or 0.1% to 939.

The Nikkei 225 Average opened sharply lower at 9,824 compared to its previous close of 9,866, mirroring the weak sentiment in the rest of the markets on concerns about the pace and the magnitude of global economic recovery. The strengthening of the local currency against the U.S greenback and weak trading across the other Asian markets on valuation concerns also influenced trading, as investors preferred to lock in profits on their recent gains and retreat to the sidelines ahead of a few key economic numbers later in the week both in the U.S and China. The index ended with a loss of 78.81 points, or 0.80% at 9,787. The broader Topix Index of all first section issues also edged lower at 918, a loss of 8.65 points, or 0.9%.

On the economic front, the Cabinet Office revealed that the government's key measure of the state of the economy, reflected by the composite index of coincident economic indicators, rose for the first time in 11 months in April to 85.8, up 1 point from March 2009. The Cabinet Office further noted that the government maintained its overall assessment of the economy as showing deterioration but added that there are signs it has stopped contracting.

In a separate statement, the Japan Machine Tool Builders' Association revealed that machine tool orders in the country declined 79.3% to 27.46 billion yen in May year-on-year. This is the 12th consecutive month of decline in machine tool orders.

Crude oil prices ended higher with a gain of $1.25 at $69.34 a barrel in Asian trading. Light sweet crude for July delivery recovered smartly from early losses and managed to end with a marginal loss of 35 cents at $68.09 on the New York Mercantile Exchange on Monday on recovery hopes.

Insurance stocks declined after a newspaper report revealed that the proposed merger of Nipponkoa Insurance with Sompo Japan Insurance might face stiff opposition. Shares of Nipponkoa slumped 4.6% while shares of Sompo Japan Insurance fell 3.1%. Other major insurance stocks also ended weaker.

Trading houses, automakers and exporters slipped following the strengthening of the local currency against the U.S greenback. Canon edged down 0.30%, Sony Corp slipped 0.92%, Honda Motors lost 1.38%, Toyota Motor fell 1.79%, and Mitsui & Co shed 3.68%.

Financial stocks ended weaker ahead of an impending announcement by the U.S. government today about the list of banks that are eligible for repaying the TARP funds to the Treasury . Mitsubishi UFJ lost 3.1%, and Mizuho Financial Group fell 3.2%, and Sumitomo Mitsubishi shed 2.60%.

Chip-makers advanced after Texas Instruments boosted the earnings guidance for the second quarter. Advantest Corp. edged up 0.32% and Tokyo Electron advanced 2.12%.

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