Nikkei slips, weighed down by losses in small-caps

Tokyo, May 30: The Nikkei average lost 0.35 percent on Tuesday as losses in small-cap stocks hurt investor sentiment while Fast Retailing Co. Ltd. and other retailers fell after weak household spending data.

The Mothers' market for start-ups fell for a fourth session to end down 1.60 percent at 1,427.55, its lowest close since November 2004.

Shuichi Hida, a portfolio manager who manages small-cap stocks at Plaza Asset Management Co. Ltd., said the Nikkei's Jasdaq average has been up since 2003 and many shares have probably factored in future growth.

''Earnings outlooks for this year have been conservative, providing no reason for investors to buy at higher prices,'' he said. The market also faced hefty selling from foreign investors, he added.

Investors have been disappointed by a slew of accounting problems and poor earnings results at start-up companies, said Tsutomu Yamada, market analyst at Kabu.com Securities Co.

''Investors seem to have given up on small-cap shares. A view has gained ground that these small companies are unreliable,'' he said.

The Nikkei ended 56.23 points lower at 15,859.45. The TOPIX fell 0.21 percent or 3.41 points to 1,612.76.

Retail stocks came under pressure after data showed that overall household spending fell 2.0 percent in April from a year earlier in price-adjusted terms, compared with a forecast drop of 1.5 percent, fuelling concerns about private consumption.

Fast Retailing, operator of casual wear chain Uniqlo, fell 1.7 percent to 10,070 yen and Seven&I Holdings Co. Ltd. lost 1.5 percent to 4,010 yen.

Shinji Igarashi, equity manager in the sales department at Chuo Securities, said the data helped pull down the retail sector.

''Consumption is something investors are worried about ... other data has come in line with expectations, though we need to see more data,'' he said.

Yutaka Shiraki, a senior strategist at Mitsubishi UFJ Securities Co. Ltd., said economic fundamentals are now being questioned with some signs of a slowdown in the United States, Japan's main trade partner.

''We should probably consider the possibility that the Japanese economy may not grow as strongly as anticipated,'' he said.

Investors grabbed profits in shares in the property sector, one of the best performers last business year.

Mitsui Fudosan Co. Ltd., Japan's largest property firm by sales, ended down 1.1 percent at 2,360 yen and third-ranked Sumitomo Realty&Development Co. Ltd. lost 1.1 percent to 2,780 yen.

NEC Corp. rose 1.2 percent to 696 yen after a strategy briefing by new president Kaoru Yano that included a plan to discuss with Matsushita Electric Industrial Co. Ltd. ways to cooperate in their cellphone business. Matsushita slipped 0.2 percent to 2,490 yen.

Another winner was Suzuki Motor Corp. after Japanese media reports said it and Nissan Motor Co. Ltd. were considering strengthening their alliance by supplying vehicles to each other to reduce development costs.

Suzuki ended up 4.1 percent at 2,685 yen.

On the Mothers market, Access Co. Ltd., a developer of software for mobile phones, fell 2.9 percent to 880,000 yen, becoming the biggest contributor to the Mothers' decline.

In the last trading hour, The head of Kao Corp told Reuters that Japan's biggest household products maker aims to return to growth in recurring profit within two to three years despite heavy amortisation costs from its purchase of Kanebo Cosmetics Inc.

Shares of Kao ended down 0.5 percent at 2,875 yen.

The Tokyo exchange saw its second-slowest day of trade so far this year, with just 1.42 billion shares changing hands on the first section. This year's low of 1.32 billion shares was set earlier this month. Decliners outnumbered advancers by a ratio of more than 3 to 1.

Reuters