Nikkei dips 0.2 pct, exporters sold on firmer yen

Enlarge Photo A share dealer works in a dealing room at the Tokyo Stock Exchange in this...

Mon, May 12 09:06 AM

By Taiga Uranaka

TOKYO (Reuters) - Japan's Nikkei share average dipped 0.2 percent on Monday, down for a third day as exporters such as Honda Motor were dented by a firmer yen against the dollar.

Financials also extended losses, with Japan's largest bank Mitsubishi UFJ Financial Group falling 2.9 percent amid rekindled concerns about the health of the sector following a massive loss by American International Group.

"The market's weak moves could be a signal that the rebound from March 17 is at its peak," said Kenichi Hirano, operating officer at Tachibana Securities.

After hitting the recent bottom on March 17, the Nikkei regained nearly 20 percent by the middle of last week, with bank shares leading the rebound.

While the index still is 25 percent below last year's high, many market analysts say Japanese stocks are no longer cheap given the weak outlook for corporate earnings.

So far, 43 percent of companies listed on the Tokyo stock exchange's first section have reported earnings and they forecast a 6 percent decline in recurring profit, or pretax profit, for the year ending in March 2009, data from the Shinko Research Institute shows.

"(The market's direction) depends on corporate outlooks. It changes on how investors see fluctuations in currencies and the cost of raw materials," said Hiroaki Osakabe, fund manager at Chibagin Asset Management.

The benchmark Nikkei average ended the morning down 23.3 points at 13,632.04. The broader TOPIX index shed 0.7 percent to 1,331.89.

The Nikkei found a support at the 25-day moving average, paring some earlier losses after closing in on that point.

EXPORTERS DOWN

Honda fell 2.2 percent to 3,140 yen and Toyota Motor Corp shed 2.3 percent to 5,180 yen. The two automakers and many other exporters based their earnings outlook on an assumption the dollar would average 100 yen during the current year ending March 2009.

The dollar slid below 103 yen in the morning before paring losses to trade around 103.15 yen.

Mitsubishi UFJ fell to 1,056 yen. Japan's largest brokerage Nomura Holdings Inc lost 2.7 percent to 1,742 yen.

One bright spot was air conditioner maker Daikin Industries Ltd, which rose 2.4 percent to 5,180 yen. It was boosted by a report in the Nikkei business daily on Saturday that group operating profit is expected to rise more than 10 percent to about 140 billion yen ($1.36 billion) this financial year, helped by strong sales of energy-efficient commercial units in China and Europe.

Trade was thin, with some 732 million shares changing hands, compared with last week's morning average of 933 million.

Decliners outnumbered gainers by just over two to one.

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