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Nikkei edges lower, chip stocks fall

Published 04/14/2011, 09:55 PM
Updated 04/14/2011, 10:08 PM
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* Nikkei down 0.6 pct

* Energy, resource stocks gain

* Aeon up after earnings, retailers in focus-fund manager

By Antoni Slodkowski

TOKYO, April 15 (Reuters) - Japan's Nikkei stock average edged lower on Friday as chip stocks fell after ratings downgrades and the benchmark looked set to round off a week of thin choppy trade stuck inside this month's tight range.

Disappointing U.S. jobs data, concerns of further Chinese tightening, and the re-emergence of Europe's debt woes have also helped weaken sentiment towards equities. [ID:nN14146589]

Tokyo stocks have regained around two-thirds of ground lost after the March 11 earthquake, but trade has turned more volatile and thin ahead of earnings reports that may pose more questions than give answers as many firms will likely not give forecasts for this business year.

"Foreigners have moved to sidelines and are waiting for earnings to start trading more aggressively, while Japanese institutional players sell whenever the market edges a bit higher," said Tetsuro Ii, chief executive officer of Commons Asset Management.

By midmorning the benchmark Nikkei average was 0.6 percent lower at 9,591.18, while the broader Topix shed 0.4 percent to 843.14. The Nikkei has traded between 9,500 and 9,800 this month.

While the Nikkei remains more than 7 percent below its pre-quake levels, the MSCI index of Asian stocks outside Japan has gained around 8 percent since the disaster.

In a post-quake review of semiconductor stocks, Bank of America Merill Lynch downgraded Tokyo Electron and Disco Corp to "underperform" from "buy".

Tokyo Electron's target price was slashed to 4,000 yen from 6,000 yen, citing expectations for weaker demand for semiconductors and the negative impact of the March 11 quake on supply chains.

Disco's target price was cut to 5,100 yen from 6,200 yen.

Shares of Tokyo Electron fell 1.3 percent to 4,450 yen while Disco slid 3.6 percent to 5,350 yen.

Japanese investors looked for clues about profit estimates for the next business year in earnings results announced by retailers who kicked off the cautiously awaited first post-quake earnings season last week.

Aeon Co, Japan's second-biggest retailer, climbed 2.7 percent to 952 yen after it forecast on Thursday a 1.5 percent rise in operating profit this financial year, with demand for basic goods set to limit the impact of a post-quake decline in overall consumer spending for the nation's second-biggest retailer. [ID:nL3E7FE0X4]

"With so many uncertain factors ahead of earnings season, people look to these companies and try prepare for the big players announcing at the end of the month," said Ii.

Resource-related companies such as Inpex Corp , Japan's largest oil and gas developer and smelters like Mitsui Mining and Smelting rose in line with gains in commodity and oil prices as a weaker dollar offset worries that surging prices would erode demand.

Inpex was up 0.7 percent at 607,000 while Mitsui Mining gained 1.9 percent to 266 yen. (Reporting by Antoni Slodkowski)

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