Japanese shares retreat from highs as traders lock in profits; JFE slides

By Kevin Buckland

TOKYO, Sept 5 (Reuters) - Japanese stocks retreated after reaching fresh highs on Tuesday, as the breaching of key levels spurred traders to lock in profits, while speculation about new share sales also weighed on sentiment.

The Nikkei 225 share average declined 0.21% to 32,870.00 as of the midday recess, after briefly popping above the psychological 33,000 mark for the first time in more than a month early in the session.

The broader Topix slipped 0.36% to 2,365.14, after renewing a 33-year high by reaching 2,379.57.

Both indexes are on track to snap six-day winning streaks.

JFE Holdings led decliners on the Nikkei by a wide margin, sliding 8.51% after the Nikkei newspaper said the steelmaker seeks to raise as much as 120 billion yen ($818.39 million)through a public share offering and another 90 billion yen by offering a five-year convertible bond to international investors in September.

Following the report, the company said its board will discuss a fundraising plan totalling 200 billion yen.

The iron & steel sector was by far the worst performer among the Tokyo Stock Exchange's 33 industry groups, tumbling 2.46%. It had led advancers with a 4.11% rally a day earlier.

"I'm not surprised to see some weakness in the market today," said Kenji Abe, an equity strategist at Daiwa Securities. "Japanese stocks have performed so well, it's very natural for investors to take some profits."

Meanwhile, the JFE news "raises concerns about the supply and demand balance for Japanese equities," he said. "Now, stock prices are high, so I think more companies may consider issuing new equities."

Overall though, Abe expects the Nikkei to gradually rise towards his end-March forecast of 35,000, buoyed in the near term by upward revisions to analysts' earnings estimates following this summer's strong earnings season.

($1 = 146.6300 yen) (Reporting by Kevin Buckland; Editing by Janane Venkatraman)