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Nikkei hits 3-week low after Texas Instruments, S&P

Published 04/19/2011, 01:58 AM
Updated 04/19/2011, 02:00 AM
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* Chip shares fall on poor TI earnings

* More U.S. manufacturers may take a hit by Japan quake-analyst

* Sony Ericsson earnings eyed for quake impact

* TDK plunges after Goldman says could be hurt be Samsung deal

* Nikkei down 1 percent, hits 3-wk low

By Ayai Tomisawa and Antoni Slodkowski

TOKYO, April 19 (Reuters) - Tokyo stocks hit a three-week low on Tuesday after chipmaker Texas Instruments warned the impact from Japan's earthquake last month would result in slower sales growth and after the yen climbed on S&P's threat to cut the U.S. credit rating.

The Nikkei fell 1.2 percent, roughly in line with other Asian bourses, as foreign investors trimmed back holdings put on in the past few weeks although trade was thin as market players wait for more U.S. and Japanese earnings.

"We need to look at demand. We already know about problems with supplies due to the quake, but I'm worried that if a drop in demand is behind TI's weaker earnings, that may dampen the sentiment for stocks further," said Kiyoshi Noda, chief fund manager at MU Investments.

Noda noted that Texas Instruments had said first-quarter revenue from the main chips in cellphones was cut by weak sales at one customer.

By mid-afternoon the benchmark Nikkei average fell 1.2 percent, or 111.97 points to 9,444.68, breaking out a trading range between 9,516 and 9,822 that had been in place for the last few weeks.

The broader Topix shed 0.9 percent to 828.61.

Already hit by fears that Greece will have to restructure its mountain of debt, Standard & Poor's threat to downgrade the United States' prized AAA credit rating sent the yen rising broadly as it provided investors with a timely excuse to dump long positions on currencies like the Aussie dollar.

"S&P's downgrade of its U.S. credit outlook may have a short-term impact on Japan stocks in terms of concerns about the stronger yen," said Makoto Nagahori, head of sales trading at Instinet. "But its long-term impact should be limited."

TDK Corp plunged 7.4 percent to 3,985 yen in heavy trade after Goldman Sachs cut the firm's target price, saying TDK earnings could be hit if Samsung Electronics , which sources HDD heads exclusively from TDK, sells its HDD operations to Seagate Technology , a possibility that has been reported by the Wall Street Journal. [ID:nL3E7FH0IR]

Texas Instruments' results hit chip-related stocks with Renesas down 4.5 percent to 684 yen and Advantest dropping 3.2 percent to 1,405 yen.

(Additional reporting by Antoni Slodkowski)

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