Tokyo, Mar 28: The Nikkei average fell 0.80 percent on Tuesday as profit-taking hit brokerage stocks such as Nikko Cordial Corp., whose high dividend yields had been attracting buyers ahead of the fiscal year-end.
Traders buying most Nikkei component stocks on Tuesday won't be able to claim dividend rights for this fiscal year as these trades won't be settled until the start of the new business year from April.
With the dividend incentive gone for this fiscal year, some traders moved to lock in profits and avoid losses from similar selling by other traders.
''Once (players) grab dividend rights they seem no longer interested given the lacklustre trade in bank shares recently, which looks to suggest a directionless market for now,'' said Tatsuyuki Kawasaki, a director in Kaneyama Securities' equities trading division.
''Investors are in a hurry to sell to cut further losses,'' he said.
The Nikkei was down 133.69 points at 16,516.41 as of 0113 GMT after rising a total of 160 points in the previous two sessions.
The TOPIX index was down 0.63 percent at 1,683.20.
Kawasaki added that price movements in bank shares have been a good yardstick for the market's direction. The banking sector IBNKS, often considered a core domestic play, fell 1 percent on Tuesday, with its topside capped by the six-year high the sector hit in January.
Nikko Cordial, Japan's third-biggest brokerage, was down 0.8 percent at 1,890 yen.
The stock hit a five-year intraday high of 2,045 yen last week following an announcement that it would more than quadruple its dividend payout for fiscal 2005/06 to 50 yen per share. The issue has also lost ground after sources said on Friday it was planning to buy up to 50 percent of foreign-controlled lender Tokyo Star Bank Ltd. in a $1.3 billion deal.
Marusan Securities Co. Ltd., which has the highest dividend yield on the Tokyo exchange's first section YLD., lost 7.2 percent or 140 yen to 1,811 yen.
Marusan has said it would pay a dividend of 110 yen per share for fiscal 2005/06, compared with 30 yen a year ago.
JFE Holdings Inc., the world's fourth-biggest steel maker, fell despite announcing an up to 10 percent increase in its export prices for the April-June quarter to take advantage of a recovery in the Asian steel market.
Shares of JFE were down 100 yen or 2.2 percent at 4,510 yen.
JFE has said it would pay a dividend of 100 yen per share.