TOKYO, Feb 22 (Reuters) The Nikkei share average was down 0.39 percent on Wednesday afternoon as semiconductor stocks such as Tokyo Electron Ltd. dropped following falls in their U.S.
rivals and bank shares came under pressure.
A recent market slump due to fears that foreign investors had started to unwind long positions has pushed down stock prices to attractive levels, luring some investors to banks and real estate firms on Tuesday.
But there was no related buying on Wednesday given a lack of fresh news now that the quarterly corporate earnings rush is mostly over.
''We thought a good amount of buying on domestic plays yesterday suggested that the market had hit a floor and was turning round. But that doesn't seem quite right,'' said Yusuke Sakai, manager of equities trading at Mizuho Securities.
''Looking back, it was just a technical rebound,'' he said.
The Nikkei lost nearly 8 percent in the two weeks through Monday, then jumped 2.96 percent on Tuesday -- its biggest one-day percentage gain in three weeks.
Orders placed through foreign brokerage firms before the opening on Wednesday showed an intention to buy more shares than they sold for a second straight day, but even that failed to inspire investors.
The Nikkei average was down 61.86 points at 15,833.08 as of 0539 GMT.
But the broader TOPIX index was up 0.22 percent at 1,616.17.
Chip stocks lost ground after Citigroup on Tuesday lowered its weighting on the semiconductor sector and semiconductor equipment industry group to ''market weight'' from ''overweight'', citing the possibility that production capacity growth could drag down chip pricing and erode industry margins.
Damian Thong, analyst at Macquarie Research, also lowered his rating on Tokyo Electron to ''neutral'' from ''outperform'', saying that orders are likely to peak in mid-2006 and sales at chip makers are likely to slow down thereafter.
Tokyo Electron dropped 2.6 percent to 7,880 yen and Advantest Corp., the world's largest maker of microchip testing equipment, fell 4.2 percent to 12,780 yen.
Banks came under pressure as dealers grabbed short-term profits, with Resona Holdings Inc., Japan's fourth-biggest banking group, falling 3.3 percent after adding 6.2 percent on Tuesday.
Honda Motor Co. Ltd., Japan's third-biggest auto maker, was up 0.4 percent at 6,960 yen after brokerage Merrill Lynch raised its target price for the shares on Wednesday.
But the stock didn't seem to react much to a newspaper report that the company plans to start selling a hybrid version of its ''Fit'' subcompact model globally as early as the business year starting in April 2007.
REUTERS SI SP1122