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TOKYO, Apr 20: The Nikkei average was virtually flat by midafternoon on Thursday as record high oil prices lifted energy firms such as Nippon Oil Corp. but hurt Oji Paper Co. Ltd.

and others sensitive to fuel costs.

Hoya Corp fell after its quarterly results failed to meet analysts' expectations. A close watch was also being kept on Yahoo Japan Corp., which was up 1.2 percent at 67,800 yen ahead of its full-year earnings results later in the day.

Mitsui Corp. hit a lifetime high after the trading firm said it was mulling a capital outlay of $6.8 billion over the next two years to expand its natural-resource business.

A recent boom in such capital spending, together with brisk domestic consumption, fuelled a sharp increase in business confidence among Japanese manufacturers in April, a Reuters survey showed on Thursday. TAN2] Yasuo Yabe, director of sales at Meiwa Securities, said with U.S. crude prices at a record high above $72 a barrel, firms such as pulp and daily goods makers that cater to consumers will find it hard to pass on higher fuel costs in prices.

''Hikes in prices have so far been accepted because the economy is picking up and wages are increasing. But there will be a limit as to how much they can raise them,'' he said.

The Nikkei was down 0.08 percent, or 13.44 points, at 17,336.68 as of 0456 GMT. The broader TOPIX index was up 0.12 percent at 1,749.46.

Rises in oil prices divided winners and losers.

Shares of Oji Paper, Japan's top paper maker, fell 2.4 percent to 683 yen. For every $1 rise in the price of crude, Oji estimates its cost base increases by 600 million yen. Its peer Nippon Paper Group Inc. declined 2.2 percent to 485,000 yen.

Meanwhile, Nippon Oil, Japan's largest oil distributor, added 2.2 percent to 968 yen. Its chairman said on Wednesday it may lift wholesale prices for oil products, including petrol, by about 4 yen per litre in May.

Trading firms also benefited from higher oil prices.

Mitsui rose 1.4 percent to 1,830 yen, after earlier hitting a lifetime high of 1,841 yen. Investors cheered the news on Mitsui's capital outlay.

Likewise, shares of larger rival Mitsubishi Corp. added 2.3 percent to 2,900 yen after earlier hitting an all-time high of 2,910 yen. The company plans outlays of 1.5-1.8 trillion yen over the next four years, mainly to build its energy and resources businesses, business daily Nihon Keizai said on Thursday.

Hoya was down 1.6 percent at 4,870 yen after it reported its quarterly operating profit rose 25.6 percent on strong demand for glass used to make chips, liquid crystal displays and hard drives, although the result was below analysts' expectations.

Meanwhile chip-related stocks dropped following lower profits at the world's largest chip maker Intel Corp Advantest Corp., a chip-testing equipment maker, fell 2.7 percent to 13,950 yen and Tokyo Electron Ltd., the world's second-biggest maker of semiconductor-making equipment, fell 0.6 percent to 8,370 yen.

REUTERS

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