published Jun 23rd 2016, 7:40 pm, by Min Jeong Lee and Yuko Takeo

(Bloomberg) —
Japanese shares pared gains as early results from the U.K. referendum on European Union membership showed better-than-expected support for the “Leave” camp.

The Topix index rose 0.2 percent to 1,300.83 as of 9:37 a.m. in Tokyo, after rising as much as 0.8 percent. Volume on the measure was 8.4 percent higher than the 30-day intraday average. The Nikkei 225 Stock Average added 0.4 percent to 16,304.58. The yen rose 1.2 percent to 104.91 per dollar, paring its advance. Futures on the U.K.’s FTSE 100 Index tumbled 2.2 percent, while S&P 500 Index contracts lost 0.5 percent.

Early results in the U.K. referendum over Britain’s membership of the European Union suggested a closer race than initial opinion polls implied, with vote counts in Newcastle-Upon-Tyne and Sunderland showing greater support for leaving the bloc than academics had forecast. A nationwide YouGov Plc survey conducted on the day of the vote indicated a 52 percent share for staying in the EU.

“If we do see Brexit it’ll reverse everything, the market will rush into a stronger yen and a weaker euro,” said Nobuyuki Fujimoto, a senior market analyst at SBI Securities Co. “It’ll be a mess, I don’t know what will happen. Stocks have already priced in a remain scenario a fair amount. If that suddenly reverses the market will be going ’huh’.”

Brexit fear has been punishing Japanese stocks more than other markets, as concern the U.K. could vote to leave the EU sent the yen on one of its longest rallies under Prime Minister Shinzo Abe’s reign. The Topix index lost 5.9 percent in June through Thursday, after tumbling as much as 10 percent, while the S&P 500 Index and the U.K.’s FTSE 100 Index are up for the month.

“Markets are very nervy at the moment,” said Joe Rundle, head of trading at ETX Capital, a brokerage in London. “The polls — and the markets — could bewrong.”

–With assistance from Adam Haigh. To contact the reporters on this story: Min Jeong Lee in Tokyo at mlee754@bloomberg.net ;Yuko Takeo in Tokyo at ytakeo2@bloomberg.net To contact the editors responsible for this story: Jeff Sutherland at jsutherlan13@bloomberg.net Tom Redmond

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