Nikkei choppy on govt tax hike, Fed concerns; real estate shares up
* PM Abe's team meets for 1st time on consumption tax discussion
* Real estate, construction shares up on Olympics hopes
* Trading subdued on Fed tapering concern
TOKYO, Aug 26 (Reuters) - Japan's Nikkei share average was flat in choppy trade on Monday morning as concerns about whether the government will raise the consumption tax as planned kept most investors sidelined, while real estate stocks and construction shares gained. The Nikkei was flat in mid-morning trade, after rising as high as 13,741.49 and dipping into the red earlier. The index rose 2.2 percent on Friday. The Nikkei's immediate resistance was seen at 13,781.32, a 38.2 percent retracement of the slide from its May high to its low in June. Investors remained cautious due to persistent worries over the U.S. Federal Reserve's plans to reduce its stimulus, perhaps as early as next month, which has seen sharp selloffs in emerging markets recently, analysts said. On the domestic front, the market is also focused on whether the country will hike the sales tax to 8 percent from 5 percent next April, as Prime Minister Shinzo Abe's special commission to discuss the tax hike prepares to meet for the first time on Monday. "Foreign investors have priced in the possibility of sales tax hike, so if this gets delayed or falls apart, it is negative for the yen as well as Japanese stocks," said Naoki Fujiwara, a fund manager at Shinkin Asset Management. Investors view the tax hike as a test case of Abe's commitment to push through broad reforms, which along with the government's fiscal and monetary expansionary policies are seen as necessary steps in lifting Japan out of nearly two decades of economic malaise. Exporters, which rose sharply on Friday, lost ground on profit-taking, with Toyota Motor Corp falling 0.6 percent and Nissan Motor Co dropping 0.8 percent. On upside, short-term investors found buying opportunities in real estate stocks and construction firms, which could benefit from redevelopment and construction needs if Tokyo will host the 2020 Summer Olympics. Mitsubishi Estate Co rose 1.8 percent, Sumitomo Realty & Development Co gained 3.1 percent, while Kalmia Corp added 2.4 percent and Taisei Corp was up 2.2 percent. Tokyo is campaigning to host the Summer 2020 Olympics, and the International Olympic Committee (IOC) will elect the winning candidate at its session in Buenos Aires on Sept. 7.
A fund manager at a Japanese asset management firm said that investors will likely be reluctant to chase the market higher until there are more cues about when the Fed will start reducing its $85-billion per month bond buying program. "Until there are more cues about Fed's tapering, money will likely shift to domestic-demand sensitive shares, and these Olympics-related stocks may see more buying," he said. The Topix gained 0.3 percent to 1,144.54. "Speculation of Fed's tapering will likely dominate the mood for the rest of the month," said Nobuhiko Kuramochi, a strategist at Mizuho Securities. "U.S. economic indicators are in focus, and attention is on next week's jobs data."