TOKYO, Feb 24 (Reuters) The Nikkei average fell 0.67 percent on Friday morning as shares in Toyota Motor Corp. and other exporters were dented by the yen's rise against the dollar.
Shares in Namco Bandai Holdings Inc. tumbled more than 10 percent after the toy maker slashed its profit forecast, while subsidiary Banpresto Co. finished the morning swamped with buy orders after Namco said it aimed to make the company a wholly owned unit.
The yen was at around 116.59 yen to the U.S. currency after rising more than 1 percent on Thursday, when Bank of Japan Governor Toshihiko Fukui reiterated that the central bank would eventually raise interest rates, raising concern the dollar's yield advantage will erode this year.
Fukui said on Friday conditions are gradually coming into place for ending the central bank's super-loose monetary policy.
Japanese short-term interest rates have been set at virtually zero for nearly five years.
''There are a lot of uncertainties in the market right now,'' said Kirby Daley, a strategist at Societe Generale Securities' Fimat division in Hong Kong.
''The forex (foreign exchange) markets are very emotional and they are going to react ... as they start to realise that something is going to change with BOJ policy.'' The Nikkei finished the morning down 108.09 points at 15,988.01. The broader TOPIX index was down 0.27 percent at 1,636.05.
Toyota, the world's second-largest auto maker, was down 1.1 percent at 6,280 yen. A stronger yen is a minus for exporters because it eats into profits when dollar-denominated earnings are brought home.
Honda Motor Co. Ltd., Japan's third-largest auto maker, gave up 2.6 percent to 6,850 yen.
Entertainment and electronics conglomerate Sony Corp.
declined 0.7 percent to 5,590 yen.
Namco Bandai lost 10.2 percent to 1,482 yen after the toy maker more than halved its full-year net profit forecast.
But its subsidiary, Banpresto Co., was untraded, facing a glut of buy orders at 3,140 yen, up 14.8 percent from Thursday's close after Namco said it would make it a wholly owned unit.
TECHNICAL CONCERNS Technical concerns also weighed on the Nikkei, after it closed above 16,000 for the first time in a week on Thursday, which put the benchmark just below its 25-day moving average of 16,100.15.
''Both the Nikkei and the TOPIX index are near their 25-day moving averages, and as they approach these technical points that makes it easy for people to sell,'' said Yutaka, Miura deputy manager of equity information at Shinko Securities.
''Right now we are at a point where the market lacks the strength, or the factors, to move it higher,'' he said.
While investors were selling exporters because of the recent strength in the yen, that might not be enough of a reason to dump strong earners over the long term, Fimat's Daley said.
''If equity investors punish the Nikkei on speculation that there's going to be a rapid exit from the zero interest rate policy ... it will most likely create a buying opportunity in stocks.'' Elsewhere, shares in Omron Corp. added 2.7 percent to 3,100 yen after the automated control equipment maker said on Thursday it planned to lift its full-year dividend by 6 yen per share, to 30 yen.
Trade volume was the lowest in a week, with 938 million shares changing hands on the Tokyo exchange's first section.
Decliners edged past advancers, 796 to 770.
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