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Market Watch

TOKYO (MarketWatch) -- Japanese shares traded on a mixed note Monday but analysts expect the nation's stock market to head much lower in the coming months as strength in the yen continues to put a damper on demand and dividend payouts.

"The combination of the worse than-expected jobs report from the U.S. and continued strength of the yen will place heavy pressure on Japanese stocks," said Tony Sagami, editor of Asia Stock Alert.

'The path of least resistance for the Nikkei 225 is going to be down -- way down. This is the time to be a seller.'

Tony Sagami, Asia Stock Alert

"The path of least resistance for the Nikkei 225 is going to be down -- way down," he said. "This is the time to be a seller."

The benchmark Nikkei 225 Average peaked above 10,700 on Aug. 31, its strongest intraday level since early October of last year, according to data from FactSet Research, but the index has since fallen back below the key 10,000 level. By the end of morning trading Monday, the index was at 9,736.63, up 0.05%.

"The Nikkei had been up about 45% from the March lows to about 10,500, but definitely was stuck for the last few weeks until turning down sharply in the last week," said Richard Hastings, consumer strategist at Global Hunter Securities.

The broader Topix has followed a similar pattern, reaching a more than 10-month high above 980 in late August only to slip to 871.78 Monday, down 0.3%.

Exporter shares were among the bigger losers amid overall strength in the yen, with Nikon Corp. /quotes/comstock/!7731 (JP:7731 1,550, -62.00, -3.85%) down 4.5%, Mazda Motor /quotes/comstock/!7261 (JP:7261 196.00, -2.00, -1.01%) /quotes/comstock/11i!mzdaf (MZDAF 2.30, 0.00, 0.00%) losing 4.6% and Sony Corp. [s: /quotes/comstock/!6758 (JP:6758 2,450, -130.00, -5.04%) /quotes/comstock/13*!sne/quotes/nls/sne (SNE 27.16, -0.86, -3.07%) down 1.2% in Tokyo.
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