Nikkei falls for 6th session, energy firms down
Tokyo, May 16: The Nikkei average fell 1.99 percent on Tuesday, extending losses into a sixth session, as energy stocks like Sumitomo Metal Mining Co. fell on lower commodities prices while Dentsu Inc. and other firms with gloomy profit forecasts lost ground.
News that two small real estate firms were postponing their earnings announcements heightened concerns about accounting practices.
Katsuhiko Mori, senior portfolio manager at Daiwa SB Investments' equity management department, said uncertainty over corporate profit prospects are dragging the market down.
''We thought earnings forecasts would be a bit better than what companies have produced,'' he said. ''I expect the market rises to be limited at least in the first half of this fiscal year.'' The Nikkei was down 328.49 points at 16,158.42, its lowest close since March 16.
The TOPIX index was down 2.19 percent at 1,644.97.
Metal smelter Sumitomo Metal Mining shed 9.2 percent to 1,530 yen after a sell-off in copper on the London Metal Exchange on Monday.
Trading firm Mitsui&Co, which trades steel, chemicals and other natural resources, lost 6.5 percent to 1,673 yen.
INPEX Holdings Inc., Japan's biggest oil explorer, fell 3.9 percent to 1 million yen after U.S. crude futures ended sharply lower on Monday in New York. After the market closed, INPEX raised its full-year profit forecast by 7.8 percent on soaring oil prices, after its INPEX Corp. unit posted a 35 percent jump in 2005/06 profit.
Japan's top advertising firm Dentsu fell 4.1 percent to 354,000 yen after producing a weaker-than-expected forecast.
Aiful Corp. may face selling pressure on Wednesday as Japan's biggest consumer lender reported after the market closed a 13 percent drop in annual profit and forecast a further decline this year after regulators ordered a punitive suspension of its business this month.
In the technology sector, Sony Corp. was down 1.2 percent at 5,180 yen even though it said it will launch the world's first notebook personal computer equipped with a next-generation Blu-ray optical disk drive in Japan in June.
A few bright spots included truck maker Isuzu Motors which advanced 1.6 percent to 390 yen after it posted strong earnings in late morning.
ACCOUNTING WOES
Yutaka Shiraki, senior strategist at Mitsubishi UFJ Securities Co. Ltd, said worries about accounting practices have been lingering in the market as accounting firm Chuo Aoyama PricewaterhouseCoopers was last week ordered to suspend auditing corporate accounts for two months beginning July 1. Three accountants at the firm were charged in connection with a book-keeping fraud at cosmetics and textiles maker Kanebo Ltd.
''The incident like this would make investors sceptical of other accounting firms as well ... this is a negative factor particularly for small-cap markets which are already sluggish,'' said Shiraki.
The Mothers market for small-cap companies tumbled 7.2 percent to 1,511.59.
Leopalace21 Corp. plunged by its daily limit of 1,000 yen or 19.7 percent to 4,070 yen after the real estate agent announced that it would restate earnings for the past five years and would postpone its earnings statement by two weeks.
Likewise, Urban Corp plummeted 14.3 percent to 1,201 yen after the property firm said on Monday it would postpone its earnings announcement as auditing procedures have not yet been completed.
Trade volume rose to its highest level in about a week, with 2.06 billion shares changing hands on the Tokyo stock exchange. More than eight stocks fell for every one that rose.
REUTERS