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Nikkei dips as resource shares fall, chips gain

Published 06/08/2009, 10:57 PM
Updated 06/08/2009, 11:00 PM
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* Resource-linked shares down as commodities prices fall

* Nikkei needs push to get to 10,000, but this week possible

* Softbank climbs on iPhone news

By Elaine Lies

TOKYO, June 9 (Reuters) - Japan's Nikkei stock average edged down 0.2 percent on Tuesday, with shares sensitive to moves in commodities such as trading house Mitsubishi Corp <8058.T> weaker after a broad decline in metals prices the previous day. But those losses were countered by gains in semiconductor-linked shares such as Tokyo Electron <8035.T> as investors snapped up the issues after the sector fell on Monday. Softbank Corp <9984.T>, Japan's third-largest mobile phone operator, surged after Apple Inc unveiled its next-generation iPhone 3GS and halved the price of its entry-level model, sparking hopes the move could boost sales at the Japanese iPhone vendor.

Some market analysts said that while any upturn in the Nikkei was likely to be limited today, the benchmark could well break above the psychologically key 10,000 threshold later this week.

"There's a sense in the market right now that the Nikkei may be a bit overheated, a bit overbought," said Noritsugu Hirakawa, a strategist at Okasan Securities.

"We have some key global economic indicators due out later this week, including U.S. retail sales, and if these confirm the growing impression that the global economy is improving, we're likely to see the Nikkei shoot up through 10,000." Hirakawa pointed to Japanese bankruptcy data as another sign that Japan's recession-hit economy may be bottoming out. The number of Japanese companies going bankrupt fell from the same month a year earlier in May for the first time in 12 months. [ID:nTKC003363]

"This implies that the amount of bad loans held by banks may not grow any further and could help the banking sector gain this week, supporting the Nikkei," Hirakawa added. The benchmark Nikkei <.N225> shed 16.93 points to 9,848.70 after hitting an eight-month closing high on Monday, while the broader Topix <.TOPX> lost 0.1 percent to 926.18.

But others were warier, saying that while there may be a break above 10,000, it may not stay above that level. "The global economy seems to have emerged from the worst-case scenario it was recently in, but without some definite fresh positive factors, such as companies revising their earnings forecasts up, staying above 10,000 may be difficult," said Takashi Ushio, head of investment strategy at Marusan securities.

TRADER TROUBLES, SMELTERS SOFT

Trading houses slipped after a broad decline in metals prices on Monday, with Mitsui & Co <8031.T> down 1.1 percent to 1,290 yen, Mitsubishi Corp fell 0.1 percent to 1,918 yen and Itochu Corp <8001.T> slipped 0.4 percent to 715 yen.

On Monday, copper led a sell-off in other industrial metals, hurt by extended gains in the dollar versus the euro and a weaker tone in equities. [MET/L]

Smelters, which surged last week, slid as investors took profits. Dowa Holdings <5714.T> lost 3.4 percent to 433 yen and Mitsui Mining & Smelting <5706.T> shed 2.8 percent to 246 yen.

Some exporters gave up part of the gains they made on Monday, when they led a broad market rally.

Canon Inc <7751.T> lost 0.9 percent to 3,330 yen and industrial robot maker Fanuc Ltd <6954.T> shed 0.5 percent to 8,050 yen.

But analysts said the longer-term picture for exporters was not too bad as the dollar has risen back above 98 yen, higher than the 95 yen level many exporters assumed when forecasting their earnings.

Softbank jumped 4.2 percent to 1,874 yen.

Chip-related shares gained amid a general mood of investor bargain-hunting of stocks that lost ground on Monday.

Tokyo Electron <8035.T> climbed 3.4 percent to 4,870 yen and Advantest Corp <6857.T> rose 1.5 percent to 1,890 yen.

Japan Tobacco Inc <2914.T> gained 3.5 percent to 286,600 yen after Nikko Citi raised its share target price to 460,000 yen, citing signs of a sales recovery in Russia, favourable currency exchange rates and little chance of a big tobacco tax hike in the short-term.

Trade was moderate on the Tokyo exchange's first section, with 1.2 billion shares changing hands, almost in line with last week's morning average.

Advancing stocks outnumbered declining ones, 820 to 725. (Reporting by Elaine Lies)

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