Array

Tokyo, Jul 11: The Nikkei average fell 0.51 per cent on Tuesday as Advantest Corp and other technology shares declined after their U.S. peers were hit by a profit warning, raising concerns about slowing earnings momentum.

Analysts said the Nikkei's sharp gains from the previous session also made some stocks ripe for profit-taking.

Shares of Kirin Brewery Co. Ltd. dropped after its revised earnings forecast disappointed investors, while Japan Airlines Corp dropped 2.6 percent to 268 yen after Nikko Citigroup pulled out as one of 15 underwriters for a planned $1.94 billion new share issue, considered a rare move.

U.S. technology stocks fell sharply on Monday after brokerage Merrill Lynch cut its rating on the sector. An earnings warning from data storage equipment maker EMC Corp. also hurt sentiment.

''There is growing uncertainty over U.S. technology companies' earnings, and this may be indicating that an economic slowdown is a real thing in the United States,'' which is a major export market for Japan, said Yoshihisa Okamoto, senior vice president at Fuji Investment Management.

The Nikkei shed 78.99 points to 15,473.82, erasing part of its 1.6 percent gain from the previous session. The broader TOPIX index was down 0.52 per cent at 1,585.85.

Yasushi Hoshi, a strategist at Daiwa Securities Co. Ltd., also said he is concerned about inventory risks at technology firms now that the World Cup is over.

''High-tech companies had probably boosted production of such products as flat-screen TVs, expecting strong demand ahead and during the World Cup,'' he said. ''There might be some inventory piled up, which could later weigh on the sector.'' Hoshi added that all in all, corporate earnings momentum is slowing due to rising raw material costs.

Kazunori Otomo, president at Oacs Investment Management Ltd., said investors are unlikely to push prices higher ahead of the Bank of Japan's policy setting meeting, at which many expect the central bank to end its zero interest rate policy.

''I don't think it's time to build your position by betting the market will go up,'' he said.

TECH SLIDES Advantest, a maker of chip testing equipment, inched down 0.9 percent to 12,020 yen. Consumer electronics maker Sony Corp. fell 1.2 percent to 4,990 yen, while Matsushita Electric Industrial Co. Ltd. lost 2.3 percent to 2,335 yen.

Kirin Brewery dropped 3.4 percent to 1,784 yen after the beer maker's increased profit forecast came short of market expectations and prompted brokerage Nikko Citigroup to cut its rating on the stock.

Shinko Securities Co. Ltd. tumbled 3.8 percent to 459 yen, and Cosmo Securities fell 2.8 percent to 208 yen after the Nihon Keizai Shimbun said the mid-sized brokerages are cutting their fees on Internet trading, fuelling concerns about shrinking revenues and the market turning competitive.

The newspaper said the cuts are aimed at competing with Nomura Holdings Inc., which launched an Internet trading business in May.

Nomura dropped 2.6 percent to 2,075 yen.

Softbank Corp dropped 5.6 percent to 2,205 yen, still remaining subdued after Merrill Lynch's sell report on Friday. Merrill also set the fair value at 1,800 yen.

After the market closed, Seven&I Holdings Co. reported a 16.3 percent rise in its quarterly profit and it kept its full-year outlook of a 22.5 percent gain.

Prior to the announcement, the stock ended flat at 3,830 yen.

Trade was slow, with 1.58 billion shares changing hands on the Tokyo exchange's first section, well below last year's daily average of 2.07 billion shares. Decliners beat advancers by a ratio of more than two to one.

REUTERS