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Nikkei drops as techs fall, US inflation feared

Written by: Staff
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TOKYO, July 6 (Reuters) The Nikkei average dropped 1.22 percent on Thursday as Advantest Corp. and other chip stocks followed U.S. counterparts lower after a brokerage cut its earnings outlook for Intel Corp.

Shares of companies sensitive to global demand such as Komatsu Ltd. and Toyota Motor Corp. also fell, dampened by renewed worries about inflation in the United States.

A record-high oil price and expected job growth in Friday's U.S. data had stoked concerns that the U.S. Federal Reserve may keep raising interest rates, defying earlier expectations of a halt in the tightening cycle.

''A fall in the U.S. market undermines the spirit here,'' said Tsuyoshi Nomaguchi, strategist at Daiwa Securities.

''Such a fall in the Nasdaq and renewed fears about inflation (in the United States) cannot be easily ignored,'' he said.

The Nikkei was down 189.37 points at 15,334.57 as of 0131 GMT. It fell 0.73 percent on Wednesday after a series of missile tests by North Korea raised fears about security in Asia.

The TOPIX index was down 1.06 percent at 1,573.06.

Advantest, the world's biggest maker of chip-testing devices, lost 1.6 percent to 11,790 yen. Chip maker NEC Electronics Corp.

slid 4.2 percent to 3,650 yen.

Komatsu, Japan's biggest construction machinery maker, was down 3.5 percent at 2,215 yen.

Toyota Motor, whose auto sales in June were higher than those of Ford Motor Co. and DaimlerChrysler combined, was down 1 percent at 5,880 yen.

A rise in oil prices bolstered energy-related stocks, with INPEX Holdings Inc., Japan's biggest oil explorer, rising 1 percent to 1.04 million yen.

Crude oil futures rose as high as .40 a barrel in New York on Wednesday, clearing the previous front-month record marked in April following news that Iran had postponed a planned meeting with the European Union to discuss incentives to end its nuclear standoff with the West.

Reuters DH VP0745

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