Nikkei turns positive, machinery orders eyed

TOKYO, July 10: The Nikkei recouped earlier losses and inched up 0.22 percent as investors bought KDDI Corp and those stocks with profit potential and scooped up Advantest Corp and other exporters on dips.

Investors were also holding back ahead of May machinery orders due to be released at 0500 GMT. The highly volatile figures are regarded as a leading gauge of capital spending. Core machinery orders are expected to have fallen a median 5.3 percent in May, compared to a stronger-than-expected rise of 10.8 percent in April.

Weaker-than-expected U.S. non-farm payroll jobs data and profit warnings by U.S. firms including 3M Co led concern about a slowdown in the U.S. economy, a key market for Japanese products, although the impact on Japanese companies may be limited, said Yutaka Shiraki, senior strategist at Mitsubishi UFJ Securities Co. Ltd.

''It's not positive for Japanese companies.... This means that Japanese exports have not much room to grow,'' said Shiraki. ''But I don't expect Japanese corporate profits to drop sharply with their inventory at low levels and fixed costs steady. That's why the market is going neither up nor down.'' The Nikkei added 32.95 points to 15,340.56 as of 0430 GMT. The broader TOPIX index was up 0.09 percent at 1,574.62.

Kazuhiro Takahashi, general manager at equity planning and administration department at Daiwa Securities SMBC Co. Ltd., said there is still uncertainty over the U.S. economy.

''The U.S. job data is a lagging indicator and if that data shows a slowdown, we could say the U.S. economy is already at the stage of falling back,'' he said.

KDDI Corp. rose 2.1 percent to 723,000 yen after Japan's second-largest mobile phone operator added the most new mobile phone customers in June, boosting earnings prospects.

Investors were drawn to defensive stocks such as industry leader Takeda Pharmaceutical Co. Ltd., which rose 1.1 percent to 7,230 yen and Astellas Pharma Inc. which gained 1.2 percent to 4,240 yen.

Advantest, a maker of chip testing equipment, turned positive, up 0.3 percent to 11,850 yen, after earlier falling as low as to 11,550 yen.

Tokyo Electron Ltd. was up 0.8 percent at 8,050 yen, bucking a 0.4 percent decline in the TOPIX's electrical machinery sector IELEC, after the manufacturer of chip-making equipment said its orders in April-June rose more than expected.

Other exporters which lured bargain hunters included Sharp Corp which was down 1.1 percent at 1,767 yen after earlier declining to 1,716 yen.

Internet and telecoms firm Softbank Corp. was down 1.5 percent at 2,265 yen, extending losses from its drop of nearly 11 percent in the previous session.

Another notable stock was Aiful Corp. which slid 9.9 percent to 4,730 yen, adding to last week's 14-percent decline on expectations that tighter regulation of the consumer-finance industry will squeeze corporate earnings.

An advisory committee to the ruling Liberal Democratic Party agreed last week to call for a cut in the maximum interest rate the lenders can charge borrowers.

Following the move, Standard&Poor's placed its ratings of Aiful and four other consumer finance companies on credit watch with negative implications.

REUTERS