Tokyo shares flat by break, soft data offsets weak yen

Tokyo - Tokyo shares ended the morning session flat on Tuesday as tepid data and profit-taking from the previous day's jump offset a weaker yen and a rally on Wall Street.

The three major US indices gained on Monday after investors took rate hike signals from the Federal Reserve as a sign of confidence in the world's biggest economy.

Fed boss Janet Yellen said on Friday the case for an interest rate hike "had strengthened", sending the greenback soaring against the yen, and boosting Japanese exporters.

But Tuesday started with losses as official data showed spending by households across Japan fell 0.5% in July from a year earlier, dropping for a fifth-straight month.

The disappointing figures, which follow weak inflation data last week, fanned concerns about Japan's economy, even as the unemployment rate fell to a 21-year low of 3.0% in July.

By the break, the benchmark Nikkei 225 index was up 5.83 points at 16 743.32, having soared 2.3% on Monday.
The broader Topix index of all first-section shares added 1.26 points, to 1 314.50.

Exporters were the main beneficiaries as the dollar rose to ¥102.11 from ¥101.88 on Monday.

Investors are now awaiting Japanese factory output figures on Wednesday as well as a US jobs report on Friday, with a strong reading expected to bolster the case for a rate hike.

"Markets were skewed strongly toward the view of a near-term rate hike following... Yellen's remarks, but the mood may falter a bit as economic data trickle in this week," Toshihiko Matsuno, a senior strategist at SMBC Friend Securities, told Bloomberg News.

"The dollar may also dial back its recent gains, which means Japanese equities that benefited from the yen's slide could see a correction."

Toyota advanced 1.46% to ¥6 237 and Honda climbed 1.02% to ¥3 168 but Sony lost 0.35% to ¥3 335 and factory robot maker Fanuc was down 0.60% at ¥17 110.