Nikkei drops to 1-month low as China PMI impact drags; Daiichi Sankyo tumbles
* Daiichi Sankyo falls on U.S. FDA's ban on Ranbaxy
* Nitto Denko soars on strong monthly sales, Citi's target hike
* Eyes on U.S. Fed's policy meeting - analyst
TOKYO, Jan 24 (Reuters) - Japan's Nikkei share average dropped to a one-month low on Friday morning as weak Chinese manufacturing activity data continued to hurt sentiment - keeping the market risk-averse before the U.S. Federal Reserve's policy-setting meeting next week. Friday's notable losers included Daiichi Sankyo Co, which tumbled 5.8 percent to a near three-month low of 1,901 yen after the U.S. Food and Drug Administration said it had banned more products from Daiichi Sankyo's Indian subsidiary Ranbaxy Laboratories from entering the United States due to manufacturing violations. Daiichi Sankyo said it is now confirming the situation with Ranbaxy. Nitto Denko swam against the tide, rising 10 percent to 4,680 yen, its highest since Dec 11. It was the eighth-biggest traded stock by turnover after it reported strong December monthly sales for materials used in flat panel screens and tablet devices. Citigroup raised its target price to 5,400 yen from 5,200 yen. The Nikkei dropped 1.7 percent to 15,431.85 in mid-morning trade after falling to as low as 15,377.64, the lowest since Dec 18. The index is about to fall below 15,337.99, a 38.2 percent retracement of the rise to a December high from a October low. On Dec. 30, the Nikkei reached as high as 16,320.22, the highest level in six years. Analysts said investors have avoided taking risks for mainly two reasons - weaker-than-expected December U.S. jobs data and disappointing manufacturing data in China released on Thursday.
"Sentiment was already poor because of the poor U.S. jobs data released early this month, and it was exacerbated by the Chinese figures," said Naoki Kamiyama, head of Japan equity strategy at Bank Of America Merrill Lynch. "The market is very cautious about the next U.S. jobs data to be released in two weeks. If the market is disappointed again, the Japanese market may enter a correction phase." He noted that investors were focused on the Fed's next policy meeting, scheduled for January 28-29, to be quickly followed by Chairman Ben Bernanke's handover to current Vice Chair Janet Yellen on January 31. The Topix dropped 1.3 percent to 1,270.89. Exporters were lower as the dollar neared a two-week low of 102.97 yen. Toyota Motor Corp shed 1.3 percent, Honda Motor Co dropped 1.4 percent while Panasonic Corp fell 2.4 percent. (A stronger yen erodes Japanese exporters' overseas earnings when repatriated.) The JPX-Nikkei Index 400, which started trading in January, shed 1.3 percent to 11,471.99.