Tuesday April 7, 08:00 AM
Nikkei drifts down, financials weak as fear returns
* Nikkei (news) drifts down, snaps four-day rising streak
* Financials fade on resurgent fears about foreign peers
* Profit-taking after sharp rises weighs on market
* Hitachi Construction slips on loss report
* But carmakers extend gains on hopes worst is over
By Elaine Lies
TOKYO, April 7 (Reuters) - Japan's Nikkei stock average edged
down 0.3 percent on Tuesday in seesaw trade, snapping a four-day
rising streak, as worries about the health of U.S. banks
pressured financial stocks, although carmakers extended gains.
Investor jitters about Japan's imminent results season led to
selling of Hitachi Construction and other shares
expected to face losses, while profit-taking after recent sharp
rises also weighed on the market.
Bank shares fell in the United States after a veteran analyst
warned banks still face fallout from excessive risk-taking and
warned of rising loan losses by the end of 2010.
'The market's stance on banks had been too optimistic
recently,' said Nagayuki Yamagishi, a strategist at Mitsubishi
UFJ Securities.
'Some large U.S. banks have already passed stress tests, but
others haven't, and given that results are coming up soon, this
simply reignited investor uncertainty.'
Veteran banking analyst Mike Mayo, who recently transferred
to Calyon Securities, initiated coverage of the U.S. banking
sector with an 'underperform' rating, saying the sector's
problems still have further to run while government action may
not help as much as expected.
Nervousness was further fuelled by a report that new
forecasts from the International Monetary Fund (IMF) are set to
suggest that toxic debts racked up by banks and insurers could
spiral to $4 trillion.
But some analysts were unfazed, noting that the market was
overdue for some profit-taking since the benchmark Nikkei
has risen roughly 25 percent from the March 10 bear market
closing low of 7,054.98 -- the lowest close since Oct 1982.
'Basically, these reports were not new bad news,' said
Takashi Ushio, head of the investment strategy division at
Marusan Securities.
'Shares have risen so sharply that these reports were just
used by investors as a good excuse to take profits.'
The benchmark Nikkei shed 25.08 points to 8,832.85, a
day after hitting a three-month closing high. The broader Topix rose 0.2 percent to 832.60.
The market shrugged off the end of a Bank of Japan meeting
and the central bank's unveiling of minor steps to ease credit
strains, noting there were no major policy changes.
CARMAKERS CLIMB, FINANCIALS FADE
Carmakers extended gains, with the transport subindex posting its sixth straight day of rises and Honda
Motor Co becoming the biggest contributor to the Nikkei
225 by volume weight.
Analysts cited factors ranging from a news report saying the
government was considering a 300,000 yen subsidy towards
purchases of hybrid or low-emission vehicles, to recent auto
sales figures for March from the United States that were not as
bad as expected.
But Marusan's Ushio (Berlin: UHO.BE - news) said the real reason was growing optimism
about the sector.
'Basically, there's a sense that autos have now made it
through the worst to where we're now seeing more and more signs
of light,' he added.
The transport subindex eked out gains of 0.9 percent. It has
risen 49 percent since hitting a low of 1,021.71 on Dec 5.
Honda gained 2.2 percent to 2,805 yen and Nissan Motor Co gained 0.4 percent to 464 yen. Toyota Motor Co
gave up earlier gains to end flat at 3,740 yen.
These moves were countered by weak financial shares, with
Mitsubishi UFJ Financial Group, Japan's top lender,
losing 1.2 percent to 507 yen and becoming the biggest drag on
the Nikkei 225 by volume weight. No 2 bank Mizuho Financial Group shed 2.5 percent to 199 yen and Sumitomo Mitsui
Financial Group lost 1.1 percent to 3,570 yen.
Hitachi Construction Machinery Co Ltd slid 3.9 percent to
1,360 yen after the Nikkei business daily said the earth-moving
equipment maker was likely to post a 50 percent fall in operating
profit this business year on declining overseas sales.
Dentsu Inc fell 1.9 percent to 1,581 yen after
Japan's biggest advertising agency said it plans to book a 40.9
billion yen ($406 million) loss on its shareholdings for the
January-March quarter.
Trade fell off slightly, with 2.28 billion shares traded
compared to last week's daily average of 2.5 billion.
Advancing shares outnumbered declining ones, 813 to 788.
(Reporting by Elaine Lies; Editing by Edwina Gibbs)
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