Nikkei hits 6-week low, yen firms after Japan GDP

Japanese shares fell to a six-week low on Monday and the yen strengthened after data showed Japan's economy grew at a slower-than-expected pace in April-June, triggering investors to pare back some of their risk exposure.

Japan, the world's third-largest economy, grew an annualised 2.6 per cent in the second quarter, a third straight quarter of expansion but slower than a downwardly revised 3.8 per cent rate in the first quarter.

"A weaker-than-expected figure triggered investors to become risk-averse, but the gap is minor, so the impact from the GDP data should be short-lived," said Nobuhiko Kuramochi, an economist at Mizuho Securities.

The median forecast was for annualised growth of 3.6 per cent, and so the data may heighten calls to delay a planned sales tax increase given concerns it could delay Japan's escape from deflation.

The Nikkei share average lost 1.2 per cent, falling to its lowest since June 28.

The yen strengthened as much as 0.8 percent to 95.92 yen to the dollar and hit a six-week high at 127.97 yen to the euro.

The dollar was otherwise steady against a basket of major currencies.

In regional markets, Asian shares as measured by MSCI Asia-Pacific ex-Japan index were little changed, although South Korean shares gained 0.4 per cent.

U.S. stocks fell on Friday, posting their biggest weekly decline since June as investors focused on when the Federal Reserve would begin pull back its massive stimulus.

Copyright: Thomson Reuters 2013