Japan's Nikkei drops 0.7 pct, TDK tumbles

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TOKYO, Nov 15 (Reuters) The Nikkei fell 0.7 percent on Thursday afternoon as TDK Corp tumbled on a UBS downgrade and investors sold Softbank Corp and other issues that posted sharp gains the previous session.

But Nikko Cordial Corp jumped 7.2 percent to 1,660 yen after it and Citigroup Inc said on Wednesday they had amended some terms of a stock-swap deal.

''Asia stocks are down and the yen is slightly higher. There isn't much positive news for the market,'' said Yumi Nishimura, a manager in the investment advisory section at Daiwa Securities SMBC Co Ltd. Nishimura said selling in the futures market also dragged down the cash market.

The Nikkei average lost 103.26 points, or 0.67 percent, to 15,396.30 while the broader TOPIX index inched up 0.08 percent to 1,498.86.

Many fund managers agree that the market has been oversold.

The Nikkei business daily said an average forecast dividend yield of the shares listed on the first section of the Tokyo Stock Exchange stood at 1.53 percent on Tuesday, exceeding the yield on the 10-year government bond yield of 1.49 percent.

''News like that shows that the bottom is near. After all, the darkest hour is that before the dawn,'' said Kazuya Nakamura, deputy general manager Norinchukin Zenkyoren Asset Management.

The Tokyo Stock Exchange data showed on Thursday that foreign investors were net sellers of Japanese stocks last week, selling a net 281.78 billion yen of shares.

Trade volume slowed with 1.93 billion shares changing hands, compared with a daily average volume of 1.98 billion shares in October. Advancers beat decliners 939 to 691.

TDK HIT TDK plunged 6.1 percent to 7,530 yen, becoming the biggest drag on the Nikkei 225, after UBS lowered its rating on the Japanese electronic parts maker to ''sell'' from ''neutral'' and slashed the price target to 7,000 yen from 9,500 yen.

Mobile operator Softbank dropped 2.8 percent to 2,565 yen, giving up part of its 6.7 percent gain from the previous session.

Mizuho Financial Group ended down 0.7 percent, giving up earlier gains, at 546,000 yen. The stock rose initially on a view that bad news concerning the company has already come out. Mizuho, Japan's second-largest bank, posted a 17 percent drop in its first-half profit and cut its full-year forecast after subprime market turmoil sparked losses at its brokerage unit and increased credit costs.

Other bank shares were mixed, with Mitsubishi UFJ Financial Group down 0.5 percent at 962 yen while Sumitomo Mitsui Financial Group up 1.3 percent at 802,000 yen.

Higher oil prices helped some energy stocks such as Nippon Oil, Japan's largest oil refiner, which rose 4 percent to 921 yen.

REUTERS BJR BD1322

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