--Clyde Russell is a Reuters market analyst. The views expressed are his own.--

 

  By Clyde Russell

  SINGAPORE, March 1 (Reuters) - The health of China's giant manufacturing sector is often cited when talking about the nation's commodity demand, but it appears that imports of crude oil and copper have decoupled from the industrial data.

  The release of the two monthly Purchasing Managers' Indexes, one by the government's statistics office and the other by HSBC, is invariably accompanied by lots of talk on whether China's economy is cooling too fast or at just the right pace.

  But it would appear to be moot when working out whether China will be consuming more or less of the two commodities that also serve as proxies of growth.

  Since late 2010, both the official PMI and the growth rate of industrial production have been on a downward trend.

  The PMI has slipped from 55.2 in November 2010 to 51 in February this year, with a low point of 49 in November 2011.

  With the 50-level separating expansion from contraction on a monthly basis, it's clear that the PMI shows that the growth rate in China's industrial output has been slowing.

  Indeed, this is exactly what the official industrial production numbers show, with the growth rate declining from an annual 18.1 percent in March 2010 to 12.1 percent in January this year.

  While investors may be concerned that China's economic engine is spluttering, in many ways this is exactly what the authorities were aiming for: they wanted to cool the overheating segments of the economy, especially housing, without causing a hard landing.

  If industrial output is still growing at an annualised 12 percent, it's likely gross domestic product will hold above 8 percent, which is seen as the level that allows China to meet its social goals.

  However, if you believed a slowdown in the growth rate of factory output means slower growth in imports of key commodities, the recent months would have proven you wrong.

 

 

  Imports of refined copper have been on a rising trend since April last year, when imports were 115,641 tonnes.

  By December, refined copper imports has almost quadrupled, reaching 406,610 tonnes.

  It's not quite as dramatic for crude oil, where the rising trend was established in the second half of 2011.

  Oil imports were 19.7 million tonnes in June, but rose to 23.4 million by January this year.

  It's also interesting to note that on a barrels-a-day basis, two of three strongest months on record were November last year and January this year.

  So if growth rates in industrial output have decoupled from crude and copper import demand, as the case appears to be, the question has to be why. Surely, factory production should have a fairly solid correlation to the consumption of the commodities used to produce goods.

  While its hard to get any definitive answers from China, it appears stockpiling of both crude and copper may be the reason.

  China is believed to have run down copper inventories before starting to restock as prices in London declined after reaching a record high in February 2011.

  Between the record and the 2011 low in October, 3-month copper in London slumped almost 34 percent.

  With crude, it seems the Chinese ramped up purchases when prices fell after reaching their 2011 high in April last year.

  Between April and October, Brent crude in London dropped 21 percent.

  The question then becomes whether this process of stockpiling is likely to continue, a bullish scenario that would be made even more bullish if industrial production growth resumes an upward trend, as suggested by the gains in the February PMIs.

  However, the Chinese tend to curb growth in commodity imports when prices rise, especially in the crude market.

  Since the October low, Brent has gained 23 percent to trade above $122 a barrel.

  It wouldn't be a surprise if crude imports in the next few months remain largely unchanged, or even drop, despite a more rosy economic outlook in both China and the rest of the world.

  London copper has also rebounded from its October low, gaining 26 percent to trade around $8,462 a tonne, an increase that may also curb Chinese appetite for the base metal.

  This raises the possibility that in the first half of 2012, the decoupling of the PMIs from oil and copper imports will continue. But this time, the PMIs may be rising, while the growth in imports of the commodities slows. (Editing by Miral Fahmy)

* IOSCO suggests oil price reporting may need oversight

  * Consultative paper asks for ideas to improve industry

  * G20 expected to support IOSCO proposals

  LONDON, March 1 (Reuters) - Oil price reporting by industry media could be regulated in an attempt to prevent market manipulation and increase transparency for the world's biggest traded commodity, global securities regulator group IOSCO said on Thursday.

  Price assessments for over-the-counter oil trade and derivatives are used to settle billions of dollars worth of deals and to help settle trade on benchmark futures exchanges.

  The International Organisation of Securities Commissions said there was a risk that reported prices could be manipulated by submission to the agencies from the market of selective or false prices.

  Under pressure to curb speculation blamed for huge swings in oil spot markets, the Group of 20 (G20) top economies last year asked IOSCO to look at the role of price reporting agencies (PRAs). The lead agencies are Platts, owned by McGraw-Hill , and privately-held Argus Media.

  IOSCO recommended a range of ideas for physical oil market PRAs, including a possible independent regulator.

  " The range of potential approaches to PRA oversight may realistically lie between recommending a form of self regulation to recommending a direct governmental regulatory system," IOSCO said in a consultation report.

 

  SAFEGUARDS

  Officials at European regulators have said they expect the G20 to adopt some of the options offered by IOSCO when the G20 meets in June in Mexico, and new regulations could be in place within two years.

  The IOSCO report said sometimes assessments of oil prices were based on a very small number of trades.

  " The number of transactions in certain benchmark assessments can often be less than five and not infrequently there are no prices submitted," the report said.

  Oil price reporting agencies now have no external body to ensure oversight of reporting standards, proper levels of transparency or other safeguards, it said.

  Argus Media chairman and chief executive Adrian Binks said in a statement Argus had already contributed to a G20 mandated study of independent price reporting organisations:

  " We are happy to continue to provide information and work with regulators and the industry to help ensure better understanding of how the physical markets are assessed."

  IOSCO has asked for responses to its consultative report from oil companies, banks, PRAs and other participants in the oil market by March 30.

  IOSCO members regulate more than 95 percent of the world's securities markets in more than 100 countries, including the U.S. Securities and Exchange Commission, Britain's Financial Services Authority and Japan's Financial Services Agency.

  Thomson Reuters competes with Platts in providing news and information to the oil markets. (Reporting by Christopher Johnson Editing by Anthony Barker)

* Record drop in production and new orders

  * Firms struggle with working capital shortage

  * Job shedding continues

  ATHENS, March 1 (Reuters) - Greek manufacturing shrank at its fastest rate in at least thirteen years in February as production and new orders declined at record rates, driving the sector deeper into recession and forcing firms to shed more jobs, a survey showed on Thursday.

  Greece will apply additional fiscal austerity to shore up its finances as part of a new rescue package it agreed with its euro zone partners and the IMF to avert a chaotic default and emerge from a severe debt crisis.

  The Markit Manufacturing Purchasing Managers' Index (PMI) for Greece fell to a survey low of 37.7 points in February from 41.0 in January, staying below the 50 mark that divides growth in activity from contraction for each of the past 30 months.

  Production and new order volumes fell at the sharpest pace in the near 13 year history of the survery as austerity sapped demand. New export orders fell for a sixth straight month and at the steepest rate since May 2010.

  Greece's 215 billion euro economy shrank by an estimated 6.8 percent in 2011, its fourth straight year of recession. It is seen contracting this year as well.

  " The latest survey provided another stark reminder of the difficulties the Greek economy is facing. Problems of accessing credit, combined with austerity, are undermining activity and demand with little evidence of this situation improving anytime soon," Markit senior economist Paul Smith said.

  Greek firms struggled to access working capital and meet vendor demands for cash payments to deliver inputs. The fall in production led to more job losses.

  " While companies are trying to maintain employment via reduced working days and hours, the inevitable impact of rapid declines in output and sales are further cuts to payroll numbers, which fell at a marked and accelerated pace," Smith said.

  Greece's unemployment rate hit 20.9 percent in November, the latest available data, highlighting the pain of higher taxes and cuts in public sector pay and pensions which suppress economic activity.

  Manufacturers adjusted to competition and weak demand with discounts, meaning their margins remained pressured as output prices fell at the sharpest rate in 33 months.

  Deteriorating conditions led firms to lower their purchasing activity and reduce inventories to cut costs. Higher prices paid for fuel, plastics and steel led to a rise in average purchase costs in February. (Reporting by George Georgiopoulos Editing by Toby Chopra)

By Leigh Thomas

  PARIS, March 1 (Reuters) - France's manufacturing sector ended a six-month slump in February as output stabilised and foreign demand boosted new orders, offering a ray of light for the euro zone's second-biggest economy, a survey showed on Thursday.

  The Markit/CDAF final purchasing managers' index (PMI) rose to 50.0 in February, from 48.5 in January, hitting the 50-point level that separates growth in activity from a contraction. However, the reading fell short of a preliminary estimate of 50.2.

  The February improvement adds to growing signs that a slump in growth has bottomed out after the economy defied economists' expectations for a contraction in the final quarter of 2011 by expanding 0.2 percent over the previous quarter.

  " The French manufacturing sector emerged from its six-month shallow downturn in February, with output edging higher and export orders rising modestly," said Jack Kennedy, senior economist at Markit. " However, domestic sales showed continued signs of weakness, while input price inflation accelerated to an eight-month high."

  The index for factory output edged up to 50.8 from 48.8 driven by consumer goods producers raising their output. Meanwhile the new orders sub-index increased to 48.3, from 45.7 in January with orders from abroad growing firmly.

  The survey also found staffing levels on the rise for the third month running in a sign companies are growing more confident about the outlook. Input prices increased for a second consecutive month in February, while output prices hit a six-month high.

  " A re-emergence of cost pressures at a time when demand remains fragile poses something of a quandary for firms, as attempting to maintain margins risks further stifling new orders," said Markit's Kennedy.

  France's manufacturing sector has trailed the bigger services sector in stabilising and the improvement raises prospects that the economy will not get worse before a presidential election in less than two months.

  President Nicolas Sarkozy is battling to catch his Socialist adversary Francois Hollande in the polls ahead of the two-round election on April 22 and May 6, which is largely being fought over the economy with unemployment at a 12-year high.

  The industrial sector has haemorrhaged 355,000 jobs during Sarkozy's five years in office, leaving France less industrialised than all advanced economies other than Luxembourg and Greece.

  Sarkozy wants to reverse the sector's decline with a cut in companies' social welfare contributions which would be financed by an increase in VAT sales tax. Hollande's answer to the sector's woes is to ramp up investment with a new public bank and savings schemes. (Editing by Daniel Flynn and Toby Chopra)

* Manufacturing sector growth slows to near stand-still

  * New orders levels decline as European demand weakens

  * Job growth weakest in 23-month period of expansion

  BERLIN, March 1 (Reuters) - Growth in Germany's manufacturing sector slowed to a near stand-still in February, a key survey showed on Thursday, tempering hopes of a strong pickup in Europe's largest economy.

  Markit's manufacturing Purchasing Managers Index (PMI) fell to 50.2 from January's 51.0, barely above the 50 mark which separates contraction from expansion. This was slightly above an original estimate for 50.1.

  " Lower new orders and job creation took the shine off the upturn in production levels, meaning that the latest PMI number really suggests a broad stabilisation in manufacturing business conditions rather than outright improvement," said Tim Moore, a senior economist at Markit.

  The PMI survey showed new business levels dropped for the eighth consecutive month, as demand slowed from Europe, which is mired in a sovereign debt crisis.

  Weaker demand in turn made firms more cautious about hiring. The rate of job growth was only marginal and the weakest in the current 23-month period of expansion.

  Data on Wednesday showed unemployment held steady at 6.8 percent in February and analysts said steep drops in joblessness experienced over the past year are likely over for now.

  Germany's export-driven economy contracted in the last quarter of 2011 as the debt crisis spread from Greece to key euro zone trading partner.

  Data shows exports fell at their fastest rate in nearly three years in December and imports unexpectedly dropped.

  But closely-watched sentiment surveys such as the Ifo business climate index, which rose for the fourth month in February, suggest a pickup in the economy this year.

  Many economists expect it will stagnate in the first quarter, dodging the two quarters of contraction which define a recession, before recovering from the second quarter onwards.

  " Looking ahead, weakening euro area export demand and rising oil prices remain the key risks to growth," said Markit's Moore.

  " On the positive side, Germany's economy seems increasingly likely to avoid a double-dip recession, and this could help spur a turnaround in clients' willingness to commit to new orders." (Reporting By Sarah Marsh Editing by Toby Chopra)

ROME, March 1 (Reuters) - Italian manufacturing activity contracted for the seventh month running in February, though at the slowest rate since September, with orders, output and employment all declining, a survey showed on Thursday.

  The data suggests the euro zone's third-largest economy, struggling to emerge from a debt crisis, is still mired in recession, although the steepest phase of the contraction may already be over.

  The Markit/ADACI Purchasing Managers Index rose to 47.8 in February from 46.8 in January.

  The index was slightly above expectations and increased for the fourth month running, but it remained clearly below the 50 mark that separates growth from contraction.

  A Reuters survey of 16 analysts had pointed to a reading of 47.1, with forecasts ranging from 46.0 to 48.5.

  The Italian economy, one of the most sluggish in the euro zone for more than a decade, has been in recession since last June and posted a 0.7 percent decline in gross domestic product in the fourth quarter.

  The Bank of Italy forecasts a 1.5 percent full-year economic contraction in 2012, far steeper than the government's official projection of -0.4 percent.

  The PMI showed Italian manufacturing activity continued to lag that of most of its euro zone partners in February, even as activity contracted across most of the currency bloc. An early survey estimate for the 17-nation area, the so-called flash PMI, edged up by less than expected to 49.0 from 48.8, still in shrinking territory.

  New orders contracted in February for the ninth consecutive month, though the orders sub-index rose for the third month running to 46.4 from 44.8 to its highest level since July 2011.

  Employment also fell at a significantly slower rate than in January, but the decline in manufacturing output accelerated.

  Input prices rose sharply to the highest level since May last year, while prices charged declined slightly for the first time since October. (Writing by Gavin Jones Editing by Toby Chopra)

MADRID, March 1 (Reuters) - Spain's manufacturing sector shrank for the tenth straight month in February, bucking forecasts for an easing in the pace of contraction and putting Spain on course for a new recession, a survey showed on Thursday.

  The Purchasing Managers Index for the country's manufacturing sector was 45.0 in February, just down from 45.1 the previous month, as a surge in input prices put the brakes on any improving momentum.

  The reading quashed predictions in a Reuters poll for a pick up to 45.5 and the index remained well below the 50 mark that divides growth from contraction.

  Spain's economy contracted in the last quarter of 2011 by 0.3 percent and the survey pointed to recession at the start of 2012.

  The country is struggling to slash its public deficit to avoid a collapse in market confidence and although the European Central Bank's trillion euro cash infusion in banks has helped stabilise Spain's sovereign debt, the economic picture is worsening.

  Unable to pass on rising costs, Spanish factories in February shed jobs at the fastest rate in more than two years, worsening employment prospects in a country where already more than one-in-five is out of work.

  " 2012 has so far brought little respite for struggling manufacturers in Spain, with domestic demand in particular reported to have fallen again," said Andrew Harker of data provider Markit.

  A surge in input costs also hit Spain's factories in February. The input prices index rose to 58.4 in February after four months of falling prices, indicating the sharpest rise in firms' costs since May.

  " Combined with another drop in output prices in the face of intense competition, the surge in costs will have added more pressure to manufacturers' margins," Harker added.

  Markit said manufacturers reported rising costs in raw materials including plastics and steel. Factories have been forced to cut costs due to weak demand, and the output prices index held below the 50 mark for the seventh month in a row.

  Factories reported a worsening in the pace of decline in new orders, including exports, which sustained a weak recovery in 2011 in the face of dire domestic demand.

  On Wednesday the Bank of Spain backed the assessment that economic indicators at the start of the year pointed to ongoing contraction at the start of 2012.

  The European Commission last week forecast the economy would shrink in 2012 by 1.0 percent, more optimistic than the central bank's own forecast of contraction of 1.5 percent. (Reporting by Nigel Davies Editing by Toby Chopra)

LONDON, March 1 (Reuters) - European shares eased on Thursday, extending the recent period of consolidation as investors digest central bank cash injections and look for a catalyst for fresh gains at a time of, at best, mixed economic growth.

  The European Central Bank's broadly as-expected injection of 530 billion euros ($709 billion) in 3-year funds into the system on Wednesday is likely to be the last one.

  The U.S. Federal Reserve also stayed silent on the possibility of more quantitative easing, suggesting that cheap central bank funds, which were key in boosting risk appetite and fuelling the equity market rally, had come to an end.

  The threat of oil prices to growth in big importer Europe and an expected decision on who will be the winners and losers in Greece's debt restructuring added to the cautious mood.

  The FTSE Eurofirst 300 fell 0.2 percent to 1,072.80 points, as investors locked in some of the gains which have been seen the index surged nearly 20 percent from late November.

  " All the good news are known  This is a breather, let's say some 3 percent on the downside in the short run and overall I think we are probably heading for more sideways movement over the next couple of weeks while equity markets struggle to reach new highs," Gerhard Schwarz, head of equity strategy at Baader Bank, said.

  " The cyclical space is prone to some setbacks probably more than the overall market." ($1 = 0.7476 euros) (Reporting By Toni Vorobyova)

* Further cental bank policy easing hopes dampened

  * Euro heads toward one-week low

  * Euprean shars down 0.3 percent early trade

  By Richard Hubbard

  LONDON, March 1 (Reuters) - A retreat in expectations for further monetary easing in Europe and the United States sent stock markets lower on Thursday while the euro neared a one-week low ahead of a Spanish bond auction and the latest summit of EU leaders.

  China's official sentiment index of purchasing managers and HSBC's private-sector factory data also reminded investors of the fragile state of the global economy, although it did suggest Beijing could avoid a hard landing.

  The euro was down around 0.1 percent to $1.3315, its lowest since Feb. 23, following gains for the U.S. dollar after comments by Fed Chairman Ben Bernanke stopped short of promising further bond purchases to stimulate the economy.

  " Our research now concludes that the euro will trade near current levels for the reminder of this quarter," analysts at Moergan Stanley said in a note.

  The FTSEurofirst 300 index of top European shares was down 0.3 percent 1071.77 points while a weaker session in Asia left the MSCI's world equity index down alomsot 0.5 percent.

  The European Central Bank's injection of a greater-than-expected 529.5 billion euros ($708 billion) into the banking sector is likely to see yields drop in a Spanish bond auction for up to 4.5 billion euros of fresh debt later in day.

  Some analysts said the success of the ploy may delay further cuts in interest rates in the euro zone.

  Safe haven German government bond futures were also retreating from record highs. European leaders convene in Brussels later on Thursday for meetings running through Friday expected to rubber stamp Greece's second international bailout. ($1 = 0.7476 euros) (Additional reporting by)

HONG KONG, March 1 (Reuters) - Hong Kong shares fell on Thursday, dragged lower by banks and developers on renewed fears of capital-raising, while a report that Chinese bank lending in February was lower than expected added to downward momentum.

  The Hang Seng Index finished down 1.35 percent at 21,387.96. The China Enterprises Index of top mainland listings in Hong Kong closed down 1.9 percent at 11,602.44

  The Shanghai Composite Index reversed early gains to end down 0.1 percent at 2,426.11, in the lowest A-share turnover in almost a month.

 

  HIGHLIGHTS:

  * Country Garden Holdings Co Ltd, the mainland's fifth-largest property developer by sales value, led percentage losses in the sector in Hong Kong, slumping 8.8 percent in more than 40 times its 30-day average volume. Country Garden, which was up 21 percent before Thursday, said it would raise HK$2.14 billion ($275 million) to fund capital expenditure by selling new shares to controlling shareholder Concrete Win Ltd, a move that put sector peers under pressure.

  * Chinese banks were hit by fundraising fears after mainland media reported that Industrial Bank Co Ltd aimed to raise at least 25 billion yuan ($3.97 billion) by selling new shares to institutional investors. Mainland media reports on Thursday followed a Reuters report on Wednesday that new yuan loans by Chinese banks may total about 500 billion yuan ($79.45 billion) in February, well below market expectations of 650 billion yuan. (Reporting by Clement Tan and Vikram Subhedar Editing by Chris Lewis)

By Tim and Ghianni

  NASHVILLE, Tennessee (Reuters) - Powerful storms that spawned tornadoes ripped through the U.S. Midwest on Wednesday, killing at least 12 people, including six in Illinois who were crushed when a house was lifted up and fell on them, authorities said.

  The violent weather that hit six Midwest states starting in Kansas and Missouri overnight swept into middle Tennessee and slammed the Cumberland Plateau region, about an hour east of Nashville, killing two women in Cumberland County and one person in DeKalb County, according to emergency agency officials.

  Three people in Missouri were also killed by a storm that struck during the night. A tornado temporarily closed the famous entertainment strip in Branson, Missouri, where country music shows and other performers draw thousands of people a day.

  Two men and four women died when a pre-dawn tornado struck Harrisburg, Illinois, a town of nearly 10,000 people, Mayor Eric Gregg said, describing the storm damage as " horrific."

  In Harrisburg, the six people were killed when powerful winds lifted a house up and dropped it on top of other homes in a housing subdivision adjacent to a wrecked shopping strip.

  " There are hundreds of homes damaged, millions of dollars in damage. The hospital is severely damaged. There's a mall with 10 stores that was destroyed," Gregg said.

  Mike Hancock, an employee of the U.S. Forest Service, and several others armed with tools attempted a rescue where the six people died.

  " We crawled in there as much as we could. Then there wasn't enough stability, the whole foundation was shaking. We had to get out of there," he said.

  Illinois Governor Pat Quinn issued a disaster declaration for the southern third of the state, Missouri Governor Jay Nixon declared a state of emergency for the state, while Kansas Governor Sam Brownback declared a state of disaster emergency for Wabaunsee County.

  The National Weather Service's Storm Prediction Center rated the Harrisburg tornado an EF-4, or one notch below the strongest tornadoes, meaning it packed winds of up to 200 miles per hour. The EF-4 rating put it on par with the devastating tornado that killed 64 people in Tuscaloosa, Alabama, last April, and one notch below the massive EF-5 Joplin storm that flattened whole sections of the Missouri town.

  The violent weather prompted reports of 18 tornadoes across six states, including Nebraska, Kansas, Missouri, Illinois, Indiana and Kentucky, according to the National Weather Service.

  Forecasters said there was no relief in sight as the stormy weather headed east to the Mid-Atlantic states and parts of the Southeast.

  " We have a number of strong, severe storms ongoing from the Appalachian Mountains through the Southeast, said meteorologist Jared Guyer of the National Weather Service Storm Prediction Center.

  There were tornado watches issued for parts of Mississippi, Alabama, Tennessee, Kentucky, Virginia, West Virginia and Ohio.

  FEAR OF ANOTHER DEADLY YEAR

  The storms raised fears that 2012 will be another bad year for tornadoes after 550 people died in the United States from them last year, the deadliest year in nearly a century, according to the Weather Service. The highest death tolls were from an April outbreak in Alabama and Mississippi that claimed 364 lives, and the tornado in Joplin on May 22 that killed 161 people.

  Twisters caused $28.7 billion in damage last year, according to the U.S. National Climatic Data Center.

  In Harrisburg, a stretch of the normally busy shopping strip along Highway 45 was a mass of splintered wood, signage and debris from collapsed stores.

  The tornado smashed a Forest Service headquarters serving the nearby Shawnee National Forest and a Walmart, and ripped away a wall from the hospital. A truck trailer and cars were upended. Dozens of people were injured, suffering broken bones and cuts, Mayor Gregg said.

  A suspected tornado killed a person in a mobile home park in rural Buffalo, Missouri, and 13 people were injured by a suspected twister, said Lamont Swanson, coroner for Dallas County.

  A man in Stoddard County in southeast Missouri was killed when his mobile home was destroyed. His wife was severely injured.

  " It looks like it just exploded," Dale Moreland of the county's emergency management service said of the home.

  A 70-year-old man died in Cassville, Missouri, when he was thrown from his mobile home by high winds, Barr County Sheriff Mick Epperly said in a news release.

  'A WIDESPREAD' EVENT

  There had been two tornado-related deaths in 2012 before these storms, both in Alabama on January 23.

  At least eight people were injured in Kentucky on Wednesday, one critically, said state emergency management spokesman Buddy Rogers. " We're getting hammered," Rogers said. " This is a pretty widespread weather event."

  Rogers said at least five homes caught fire, the roof of an elementary school gymnasium in Muhlenberg County was blown off, but no students were injured.

  A suspected tornado a half-mile wide damaged more than 50 homes in southern Indiana, said Madison Seib, a public information officer in Warrick County, Indiana. Warning sirens alerted residents to take cover, and there were no serious injuries, she said.

  The tornado in Branson caused mostly minor injuries to about 30 people, damaged three theatres, four or five hotels and numerous stores that will have to be closed for a while, said Ross Summers, president of the local chamber of commerce.

  " Some businesses will take some time to reopen, no question about that," Summers said.

  The storm struck early Wednesday, after entertainment shows had shut down and about two weeks before the busy tourist season begins, city officials said.

  " We are still in shock," said Rose Atchley in the city administrator's office. " The strip is totally shut off. There is lots of debris here and there. We are struggling along."

  Kansas officials said a suspected tornado inflicted heavy damage to Harveyville near the state capital of Topeka, critically injuring three people. Eight others suffered minor injuries.

  (Reporting by David Bailey, James Kelleher, Kevin Murphy, Bruce Olson and Carey Gillam Writing by Andrew Stern Editing by Greg McCune and Eric Walsh)

TOKYO, March 1 (Reuters) - Japan's Nikkei average fell on Thursday and failed to hold 9,800 for the second day in a row, as domestic investors locked in profits after the index rallied more than 10 percent last month and posted its best February performance in two decades.

  The Nikkei ended 0.2 percent lower at 9,707.37 after trading as high as 9,865.75 earlier in the session, while the broader Topix was down 0.5 percent at 831.54 (Reporting by Dominic Lau Editing by Michael Perry)