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Nikkei set for 2-month closing low on exporters

Written by: Staff

TOKYO, May 15 (Reuters) The Nikkei slid 1.62 percent on Monday morning, heading for its lowest close in two months as exporters such as Canon Inc. lost ground after a sharp fall in U.S. stocks and worry about the impact of a stronger yen. Nintendo Co. Ltd. hit a four-year high on expectations for its forthcoming game console, while Softbank Corp. rose following a report it has joined forces with Apple Computer Inc. to develop a mobile phone with a built-in iPod music player.

''A lot of the decline today is due to the influence of the U.S.

market. The yen is certainly strong, but today we're not seeing the kind of extreme movements we've seen before -- such as a rise of 1 or 2 yen to the dollar,'' said Toshihiko Matsuno, assistant general manager of investment research department at SMBC Friend Securities.

U.S. stocks fell sharply on Friday after a jump in import prices fanned inflation concerns and weaker crude oil prices hurt energy stocks.

Still, the stronger yen remained a concern for investors, Matsuno said.

''The tally from recent earnings forecasts shows that (exporters') break-even point is around an exchange rate of 104 yen to the dollar ... While there's still a little room, anything above 110 makes it tough for them,'' he said.

The Nikkei finished the morning down 268.79 points at 16,332.99.

If it closes at this level it will book its lowest finish since March 16 and its fifth straight loss.

The broader TOPIX index was down 0.96 percent at 1,671.99.

The yen was at 109.50 to the dollar. On Friday it hit an eight-month high of 109.29. A strong yen is a minus for Japan's exporters as it eats into profits when earnings from abroad are brought home.

Canon, which makes more than 75 percent of its sales abroad, fell 3.6 percent to 8,360 yen.

Fellow exporter Toyota Motor Corp. declined 2 percent to 6,240 yen, down for a sixth straight session.


In Osaka trade, shares of Nintendo climbed 7 percent to 19,860 yen, their highest since April 2002. The stock has risen since last Tuesday when the company said its next-generation video game console, Wii, will be available in the fourth quarter.

The console stole the spotlight at last week's Electronic Entertainment Expo (E3) show in the United States from Sony Corp.'s PlayStation 3.

Softbank gained 3.6 percent to 3,030 yen, and was the most actively traded stock by value AM.on the Tokyo exchange's first section.

''There are not a lot of opportunities for buying today, so investors are jumping on whatever chances they can get,'' said Katsuhiko Kodama, senior strategist at Toyo Securities, referring the Internet conglomerate's advance.

Softbank is working with Apple to develop mobile phones with built-in iPod music players, business daily Nihon Keizai said on its website on Friday.

A spokesman for the Japanese firm declined to comment on the report.

Nippon Telegraph and Telephone Corp. gained 4.5 percent to 556,000 yen after the world's largest telecoms group by revenue forecast growth in profits and revenues this year thanks to growing data communication services.

The company also raised its dividend for the 2006/07 financial year to 8,000 yen per share from 6,000 yen in 2005/06.

Trade volume was lower, with 857 million shares changing hands, compared with last week's morning average of 920 million shares.

Decliners outnumbered advancers by a ratio of more than 2 to 1.


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