Wires

Nikkei drops as ex-dividend stocks weigh; automakers, banks down

Ayai Tomisawa
WATCH LIVE

* Mothers market soars helped by AnGes

* Companies going ex-dividend take off about 180 points off Nikkei - analysts

* Stocks with higher yields underperform

TOKYO, March 27 (Reuters) - Japan's Nikkei dropped on Wednesday, pressured by companies going ex-dividend even as the downside was limited by a nervous calm over signs of deteriorating prospects for the U.S. economy.

Companies whose business years end in March went ex-dividend on Wednesday, after which investors will no longer qualify for the latest dividend payout.

Market participants estimated the effect of the resulting adjustment to prices would take off about 180 points from the Nikkei benchmark index.

The Nikkei share average ended down 0.2 percent, or 49.66 points, to 21,378.73.

The mothers market, on the other hand, soared 2.2 percent to a two-month high, helped by biopharmaceutical firm AnGes Inc which jumped 9.5 percent after it said it obtained conditional approval from the health ministry for HGF plasmid to treat patients with critical limb ischemia (CLI).

The Japanese market has been volatile this week, tumbling 3 percent on Monday and rebounding on Tuesday. Investor sentiment was hit by concerns about a possible U.S. economic recession after the three-month and 10-year portion of the Treasury yield curve inverted on Friday.

Overnight, U.S. yields were steady, providing some relief to the market, analysts said.

"Since the market saw a big dip already, the bad news seemed to have been priced in for now," said Isao Kubo, an equity strategist at Nissay Asset Management, adding that investors will continue to monitor economic indicators to assess the health of the U.S. economy.

On Tuesday, investor sentiment was tested again by weak U.S. consumer confidence numbers for March, as well as housing data that showed U.S. homebuilding fell more than expected in February.

"The data are not good, but they are not causing too much alarm for investors which could trigger sharp selling," Nissay's Kubo said, adding sentiment would also be supported as long as the dollar-yen level stayed comfortably above 110 yen.

The broader Topix dropped 0.5 percent to 1,609.49.

Stocks with high dividend yields underperformed, such as utilities, banks and some exporters.

Kansai Electric Power tumbled 4.2 percent, Tokyo Gas shed 1.6 percent while Mitsubishi UFJ Financial Group dropped 1.4 percent and Sumitomo Mitsui Financial Group lost 2.4 percent.

Toyota Motor Corp declined 2.0 percent and Subaru Corp slumped 3.6 percent.

Nonferrous metal products distributor Alconix tumbled 8.3 percent after the company cut its net profit outlook for the year ending March 2019 to 4.3 billion yen from 5.5 billion yen. (Editing by Shri Navaratnam)