Nikkei falls as resource firms, brokers weaken

TOKYO, June 20 (Reuters) The Nikkei average fell 0.28 percent on Tuesday morning as resource stocks such as Sumitomo Metal Mining Co.

Ltd. declined on a fall in commodities and pessimism on the outlook for U.S. and Japanese share markets pulled down brokers such as Nomura Holdings Inc.

Trade was sluggish for the second straight session in the absence of major economic data or events, and many foreign investors were sidelined due partly to geopolitical concerns after reports of a possible imminent missile test by North Korea.

''The lack of visibility in U.S. stocks is one thing, and the risk of a missile test by North Korea is another thing which is making foreign investors reluctant to trade Japanese shares,'' said Tsuyoshi Segawa, an equity strategist at Shinko Securities.

The Nikkei was 42.24 points lower at 14,818.11 by midday after falling 0.13 percent on Monday. The TOPIX index was down 0.21 percent at 1,524.43.

Buying by foreigners was the main driver behind the Nikkei's 40 percent rally last year, but uncertainty about the U.S. interest rate outlook has made global investors reluctant to trade riskier assets, such as Japanese shares, in recent weeks.

One focus is on comments due later in the day by Bank of Japan Governor Toshihiko Fukui.

Fukui was set to give details of his investment in an equity fund, whose manager is under arrest for suspected insider trading, and was separately due to speak on monetary policy at 0300 GMT at the Japan National Press Club.

A market consensus is that Fukui will not face any legalproblems over the investment and does not need to step down, despite calls by some opposition lawmakers for his resignation.

RESOURCE FIRMS, BROKERS Among losers, metal smelter Sumitomo Metal Mining lost 2.7 percent to 1,277 yen. Nippon Mining Holdings Inc., operator of Japan's largest copper smelter and fifth-biggest oil refiner, fell 1.6 percent to 920 yen.

U.S. crude oil futures slid on Monday after Iran said there was a positive atmosphere in the dispute over its nuclear programme while copper prices fell due partly to concerns over economic growth prospects out of China.

Nomura, Japan's biggest brokerage, was down 1.6 percent at 2,095 yen and Internet brokerage Monex Beans Holdings Inc. sank 4.2 percent to 114,000 yen.

Japan Airlines Corp. fell 2 percent at 299 yen after the trouble-hit airline said on Monday that four of its labour unions may hold a one-day strike on Wednesday, which could force it to cancel a quarter of its domestic flights.

Chugai Pharmaceutical Co. Ltd. fell 2.2 percent to 2,230 yen after the drug maker said on Tuesday it will recall some 900,000 doses of medicines made with fetal calf serum that originated in the United States.

Japan has banned the use of U.S. fetal calf serum since 2004, following the discovery of a case of mad-cow disease there.

A notable gainer was electronics conglomerate Fujitsu Ltd. T> , which rose 1.9 percent to 849 yen compared with a 0.25 percent fall in the electronics machinery subindex IELEC.

Competitive Technologies Inc. said on Monday a U.S. court ruled against it in a patent infringement case with Fujitsu, which involves the use of plasma display technology.

Trade volume slowed to the lowest morning level since July last year with 642 million shares changing hands on the Tokyo exchange's first section.

Decliners outnumbered advancers 956 to 588.

In the broader market, shares of Web advertising firm Adways Co.

Ltd. rose 5 percent on their debut on the Mothers market for start-ups, despite a mistaken sell order by a brokerage that had intended to sell shares in CDG Co. Ltd., another stock that debuted on Tuesday.

Analysts said the incident amid a rush of new listings of six companies had little impact on the Tokyo market.

''It's an individual case, not an issue for the market or small-cap stocks as a whole,'' said Hiroyuki Fukunaga, chief strategist at Rakuten Securities.

Reutes CH GC0922