TOKYO, April 6 (Reuters) - Japan's Nikkei average dipped 0.5 percent on Tuesday as profit-taking emerged after successive days of 18-month highs, with exporters such as Canon Inc losing ground on a slightly stronger yen.
But Nissan Motor Co rose 1.1 percent after sources told Reuters that French parent company Renault SA, Nissan, and Germany's Daimler AG are likely to announce partnership and cross-shareholding plans as early as Wednesday.
Analysts said the decline would be limited on growing prospects of a sustainable global economic recovery, helped by Friday's strong U.S. jobs report and reinforced by Monday releases showing services grew above expectations in March and pending homes sales rose more than expected in February.
'There have been a lot of reports that companies will revise their earnings forecasts upwards, and these sorts of expectations will limit any dips in stocks,' said Hideyuki Ishiguro, a strategist at Okasan Securities, who added that the next target for investors would be 11,500.
'We still don't have enough proof of recovery to get the Nikkei back up to where it was before the Lehman shock, around 12,000. That 11,500 level is about as far as it can rise on these kinds of expectations alone,' Ishiguro said.
The benchmark Nikkei edged down 57.92 points to
11,280.36 after hitting an 18
month closing high of 11,339.30 on Monday for its third straight day.
The broader Topix lost 0.5 percent to 991.97.
Though the Nikkei's relative strength index (RSI) has risen to 76, well into what is considered overbought territory, longer-term indicators such as MACD suggest the rising trend remains unchanged.
'We have some short-term technicals suggesting the market is a bit overstretched, but any corrections will be more along the lines of a small breather and there's no change in the overall trend to buy,' said Hiroichi Nishi, general manager at the equity division of Nikko Cordial Securities.
In terms of retracement levels, the next major level is the
50 percent retracement of the 2007 to 2008 sell
off near 12,650.
The dollar slipped 0.2 percent against the yen to 94.20 yen a day after hitting a seven-month high against the Japanese currency, which market players said was making the Nikkei more vulnerable to profit-taking.
Canon slipped 1.8 percent to 4,430 yen, Sony Corp lost 1 percent to 3,570 yen and Nikon CorpT lost 1.5 percent to 2,122 yen.
Fast Retailing fell 1.7 percent to 14,680 yen, extending losses a day after tumbling more than 10 percent after its Uniqlo budget fashion chain posted its biggest sales drop in seven years in March as cold weather hurt sales of spring clothing.
But Nissan rose to 830 yen.
Renault and Daimler have been discussing a partnership as carmakers worldwide seek to become more competitive by sharing technology costs and gaining scale. The automobile sector, which is emerging from a drastic downturn, is also scrambling to meet tightening emissions rules.
The Nikkei reported that Renault and Daimler had agreed to take 3 percent stakes in each other, with Nissan and Daimler moving towards a similar arrangement.
Iida Home Max, a builder of single-family homes, surged 7.9 percent to 1,626 yen after announcing plans for a
2-for
1 share split and to retire about 4.3 percent of its outstanding shares. (Reporting by Elaine Lies; Editing by Edwina Gibbs) ((elaine.lies@thomsonreuters.com; +81 3 6441 1807; Reuters Messaging:elaine.lies.reuters.com@reuters.net))
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