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Japan's Nikkei dips on BOJ's ETF purchase plan; Topix at 30-year high

TOKYO, March 19 (Reuters) - Japan’s benchmark Nikkei index fell while the broader Topix hit a 30-year high, as the Bank of Japan (BOJ) said it would only buy Topix-linked exchange traded funds after a review of its policy framework.

The Nikkei share average closed 1.41% lower at 29,792.05, while the broader Topix inched up 0.18% to 2,012.21, its highest since 1991.

The Nikkei’s fall accelerated after the BOJ said it would only buy ETFs that are linked to the Topix index. It also said it would buy up to 12 trillion yen ($110.21 billion) at most, and slightly broadened a trading band for its 10-year bond yield target, as widely expected.

“The impact of the BOJ’s move on the Nikkei will be limited,” said Shingo Ide, chief equity strategist at NLI Research Institute. “It will contribute to a healthy correction in the NT ratio.”

The so-called NT ratio of the Nikkei and Topix dropped to 14.81 from 15.04 on Thursday. It had hit a record high of 15.68 earlier this month.

Nikkei heavyweights fell, with Uniqlo clothing store operator Fast Retailing shedding 6.1% and start-up investor SoftBank Group losing 2.46%.

Blue-chip technology shares also declined, with Tokyo Electron dropping 2.59% and Fanuc slipping 2.93%.

The sea transport sector advanced. Nippon Yusen jumped 4.24%, Mitsui OSK Lines rose 2.77% and Kawasaki Kisen gained 2.74%.

Japan’s top three banks gained amid rising interest rates, with Mizuho Financial adding 1.39%, Sumitomo Mitsui Financial up 1.95% and Mitsubishi UFJ Financial climbing 1.92%.

Fast Retailing was the biggest percentage loser in the Nikkei, followed by Kikkoman, losing 3.98%, and Konami Holdings, down by 3.66%.

The top percentage gainers in the index were Fukuoka Financial Group, up 6.36%, followed by Japan Post Holdings, gaining 4.48%, and Honda Motor, up 4.45%. ($1 = 108.8800 yen) (Reporting by Junko Fujita; Editing by Subhranshu Sahu)

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