TOKYO, Sept 2 - Japanese stocks came off 14-month highs and were seesawing in and out of positive territory by mid-afternoon on Tuesday as investors locked in profits on NEC Corp <6701.T> and other strong performers in recent trade. Traders said sentiment was still upbeat, but that investors were simply wary of pushing stocks much higher with technical indicators suggesting the market was overheated in the near term. "The market's rise has gotten a bit out of hand. It's time for everyone to take a break and let cooler heads prevail," said Ken Masuda, a senior dealer of equities at Shinko Securities.
"Going short above 10,700 may not be a bad idea." As of 0439 GMT, the Nikkei was up 0.08 percent or 8.68 points at 10,678.86 points after rising in the morning as far as 10,748.76, a 14-month high. The TOPIX index <.TOPX> firmed 0.01 percent to 1,027.12 following Monday's 2.5 percent gain. By at least one technical measure, the market is due to correct. The Nikkei's 14-day relative strength index is currently around 81, well above the overbought line of 70 which usually means the average will struggle to move higher in the short term. Investors pocketed profits on PC and chipmaker NEC, down 0.86 percent at 920 yen, and Sammy Corp <6426.T>, a "pachinko" pinball game machine maker whose stock had rallied 21 percent in the past two sessions. Sammy fell 4.43 percent to 4,100 yen. Still, big banks maintained their upward momentum after Goldman Sachs placed Sumitomo Mitsui Financial Group (SMFG) <8316.T> and UFJ Holdings <8307.T> on its recommended list, citing a drop last business year in the sector's bad loans.
SMFG rose 4.53 percent to 438,000 yen, while UFJ gained 8.49 percent to 345,000 yen. Mizuho Financial Group <8411.T>, the world's largest bank by assets, shot up 6.12 percent to 156,000 yen, having earlier hit a lifetime high of 161,000 yen. Elsewhere, Softbank Corp <9984.T> rocketed up 14.12 percent to 3,960 yen, partly due to speculation the major Internet services company would be chosen as a new component of the Nikkei 225 share average in an annual reshuffle later this month.//