Nikkei eases on US woes; Tokyo Electron soars on multibillion dlr takeover
* Nikkei down in choppy trade
* Tokyo Electron jumps on M&A news
* Market cautious as Oct. 1 decision on sales tax hike eyed
TOKYO, Sept 25 (Reuters) - Japan's Nikkei share average eased for a second day on Wednesday morning on the back of weakness in Wall Street, but the pullback was contained by a sharp jump in Tokyo Electron Ltd shares on news of a $7 billion-plus takeover of the tech company by Applied Materials Inc. The market was tentative from the start as worries over a possible U.S. government shutdown soured the mood.
Traders were also cautious ahead of an Oct. 1 decision by Prime Minister Shinzo Abe on whether to hike the sales tax to 8 percent from 5 percent in April. The early spotlight fell on Tokyo Electron, which surged 13 percent and was the third most traded stock by turnover on news that it will be acquired by Applied Materials in an all-stock deal valued at more than $7 billion. The deal, which analysts expect to hold up under scrutiny from antitrust regulators, will create a company valued at about $29 billion that would be 68 percent owned by Applied Materials shareholders, the companies said on Tuesday. Big cap exporters were mixed, with Sony Corp shedding 0.4 percent, Panasonic Corp dropping 0.6 percent, while Toyota Motor Corp advanced 0.3 percent. The Nikkei shed 0.3 percent to 14,685.34 in choppy trade, after briefly entering positive territory earlier. The index moved away from a nine-week high of 14,816.65 hit last Friday. The Topix dropped 0.5 percent to 1,208.92. "The Japanese market is in a correction phase this week after rising sharply last week," said Kyoya Okazawa, head of global equities at BNP Paribas. "Investors are still traumatized with a market fall last May." He said that following the market's slump in May on worries over a slowdown in China and the prospect of the U.S. Federal Reserve tapering its stimulus, sentiment has also been hit by the absence of crucial economic reforms promised by Abe. The sales tax hike is seen as a test of Abe's commitment to follow through on tough measures to complement the government's aggressive fiscal and monetary stimulus that's sent the Nikkei soaring over 40 percent this year. "Investors are staying on the sidelines as they want to see if (Abe) can commit this time," Okazawa said. Traders also said that uncertainty remains over the Fed's intentions after the central bank shocked markets last week by leaving its current stimulus programme intact. For now, however, some of the focus has turned to Capitol Hill as Tea Party-backed U.S. senators are threatening to stall a bill to fund the U.S. government, they said. "It's negative to investor sentiment as a whole," said Hikaru Sato, senior technical analyst at Daiwa Securities, referring to the political wrangling in Washington. On Tuesday, the Dow Jones industrial average fell for a fourth day.