Nikkei falls on West Asia tensions, Canon down

TOKYO, July 18: The Nikkei average fell 1.85 percent on Tuesday as selling on continued violence in the West Asia hit large-cap core stocks while Canon Inc. lost ground on a report of a U.S. rival's entry into the office-use colour printer market.

''The selling now has little do to with the Japanese economy and its fundamentals,'' said Tsuyoshi Nomaguchi, strategist at Daiwa Securities.

''It's about investor worries about capital flight for safer assets, which is being reflected in a sell-off in the yen for the dollar,'' he said.

The dollar held near a three-month high against the yen on Tuesday as investors turned to the perceived safety of the world's most liquid currency due to rising Middle East tensions.

The Nikkei average <.was down points at as of gmt extending falls into a fifth session.>

The capital-weighted TOPIX index lost 1.94 percent to 1,482.14. It earlier fell more than 2 percent to a four-week intraday low of 1,488.47.

Bank shares were among the hardest hit after rising recently on expectations that a widening spread between lending rates and deposit rates would prop up the sector's earnings.

Japan's central bank raised interest rates for the first time in six years on Friday, lifting its key rate to 0.25 percent from zero and affirming the end of a long era of deflation and economic stagnation.

Mitsubishi UFJ Financial Group Inc., Japan's biggest banking group, dropped 3.2 percent to 1.53 million yen. No. 2 Mizuho Financial Group Inc. fell 1.7 percent to 945,000 yen.

Camera and copier maker Canon slid 3.1 percent to 5,320 yen after the Nihon Keizai business daily said on Tuesday that Dell Inc., the world's top personal computer maker, would enter Japan's office-use colour printer market with products priced around half those of competitors.

Among other printer makers, Ricoh Co. Ltd. slumped 4.1 percent to 2,205 yen and Seiko Epson Corp. sank 3.6 percent to 2,715 yen.

Reuters