Nikkei falls, Komatsu down after China tightening

TOKYO, June 19 (Reuters) The Nikkei average fell 0.46 percent on Monday as China's credit tightening weighed on shares in construction machinery maker Komatsu Ltd. and other firms who rely in part on demand from China.

Continued concerns about the outlook for U.S. interest rates and their impact in a key market for Japanese products also pulled down Toyota Motor Corp. and other exporters that posted strong gains on Friday.

Koichi Seki, manager at Chuo Securities sales marketing department, said there was uncertainty over the U.S. economy as it was as yet unknown how far the Federal Reserve would hike interest rates after an anticipated rise next week.

''We may be able to buy high-tech and auto shares now that they look reasonable, but uncertainty about the rate outlook in the U.S.

is hanging over the markets, here and there,'' he said.

The Nikkei was 68.55 points lower at 14,810.79. It jumped 2.82 percent on Friday, its biggest one-day percentage gain since Feb. 21.

The TOPIX index was down 0.72 percent at 1,523.62.

Komatsu, the world's second-biggest construction machinery maker, lost 3.3 percent to 2,080 yen.

Toyota Motor, the world's second-biggest auto maker, was down 1.4 percent at 5,760 yen. Toyota gained 3.7 percent on Friday following a sharp rebound on Wall Street.

Investors mostly shrugged off reports about the likelihood of an imminent missile test by North Korea although some said the Tokyo market could be hurt if the test went ahead and increased political tension in the region.

Japan warned North Korea on Sunday of a ''harsh response'' from Tokyo and Washington if it went ahead with a test.

''So far, it doesn't seem that the Tokyo market is nervous about it. A breakout of war against the U.S. and Japan is unthinkable,'' said Kenichi Hirano, strategist at Tachibana Securities.

''North Korea has used and is now using again such risky measures to demand its own interest,'' he added.

DEMAND FROM CHINA Meanwhile, concerns about demand from China hurt investor appetite for commodity-related stocks.

China's central bank on Friday imposed new limits on the amount of money commercial banks can lend to prevent its economy from overheating.

''China has put a brake on its red-hot economy and that naturally causes fears about its impact on commodities markets, namely non-ferrous metals and oil,'' said Tatsuyuki Kawasaki, director of equities trading division at Kaneyama Securities.

Mitsubishi Materials Corp., Japan's biggest non-ferrous metals smelter, was down 2.3 percent at 461 yen.

Japan's No.1 steel maker Nippon Steel Corp. fell 1.2 percent to 400 yen, helping send the sector subindex ISTEL.down 1.24 percent.

Orix Corp.'s shares dropped 3.3 percent to 29,290 yen after Japan's securities watchdog called on Friday for disciplinary action against the asset management arm of the company and its real estate investment fund (REIT).

Profit-taking hit brokerage shares after the sector ISECU.

climbed 5.56 percent on Friday, its biggest one-day jump in three months. No.1 brokerage Nomura Holdings Inc. lost 2.1 percent to 2,140 yen.

In contrast, Yahoo Japan Corp. rose 3.7 percent to 59,500 yen.

The Nihon Keizai Shimbun reported on Monday that Yahoo will introduce a new system whereby those who have web pages or blogs through Yahoo can get a commission if they refer to any products sold on Yahoo shopping mall and purchases are made.

Trade was the slowest in nearly two weeks, with just 741 million shares changing hands on the Tokyo exchange's first section.

Advancers edged past decliners 810 to 779.

REUTERS CH ND1022