Nikkei slips, energy and airlines down on bomb plot

TOKYO, Aug 11: The Nikkei average slipped 0.42 percent on Friday after a bomb plot foiled by British authorities stoked worries about air travel, pushing down airline stocks such as All Nippon Airways Co. Ltd. as well as energy shares.

Trading firms, many of which handle natural resources, were also lower, although Kawasaki Kisen Kaisha Ltd. and other shipping firms rose on hopes that lower oil prices would help cut their fuel costs.

''The incident in Britain has a negative impact on the economy by curbing consumption, especially in the travel-related sector,'' said Kazuhiro Takahashi, general manager in the equity planning and administration department of Daiwa Securities SMBC Co. Ltd.

The Nikkei shed 65.89 points to 15,565.02.

For the week the Nikkei was little changed, edging up just 0.42 percent. Still, that meant the benchmark was able to book its third straight weekly advance.

The broader TOPIX index was down 0.31 percent at 1,577.92.

Tatsuyuki Kawasaki, director of equities trading at Kaneyama Securities, said selling in the energy sector may be speculative as the impact from falling demand for aircraft fuel was limited.

''Airplanes use the best oil -- they won't fly with gasoline used in automobiles. And companies which can supply such high-quality oil are very limited,'' he said.

Still, San-Ai Oil Co. Ltd., which has a monopoly to supply fuel to aircraft at Tokyo's domestic Haneda airport, fell 2.2 percent to 498 yen.

INPEX Holdings Inc., Japan's largest upstream oil firm, gave up 2.7 percent to 1.09 million yen while trading firm Mitsui&Co. Ltd.

shed 2.5 percent to 1,700 yen.

The stock market was unfazed by weaker-than-expected GDP data showing Japan's economy expanded 0.2 percent in the three months to June compared with the preceding quarter, an annualised growth rate of 0.8 percent.

Expectations of a slowdown in the U.S. economy, the world's largest, have led some investors to think the Japanese stock market will struggle to advance going forward, but Jun Nishizaki, chief portfolio manager at Nissay Asset Management, said that may not be the case.

On the Tokyo Stock Exchange's first section, he said, twice as many companies have raised their full-year outlooks in the latest quarter than have cut them.

''I feel that the expertise of Japanese companies has recovered a bit against their Taiwan or South Korea rivals, and an expected slowdown in the U.S. economy may not affect them as much,'' he said.

AIR STOCKS FLYING LOW All Nippon Airways dropped 1.6 percent to 442 yen and its rival Japan Airlines Corp. fell 1.4 percent to 207 yen.

Shares of travel agencies lost ground with Kinki Nippon Tourist Co. Ltd. down 1.6 percent at 434 yen.

Japan's No. 3 shipping firm Kawasaki Kisen Kaisha, on the other hand, rose 3.6 percent to 726 yen while its rival Mitsui O.S.K.

Lines Ltd. added 1.5 percent to 832 yen.

Favourable ratings by brokerage firms moved some stocks.

Japan Steel Works Ltd. surged 12.8 percent to 879 yen after Mitsubishi UFJ Securities initiated coverage with a ''1'' rating, expecting the share price to outperform the TOPIX Index by more than 15 percent in the following 12 months.

Shares of property and construction companies rose after Credit Suisse raised its ratings on the two sectors to ''outperform'' from ''neutral'', citing no let-up in bank lending to the real estate sector and thus expected demand for construction.

Mitsui Fudosan Co. Ltd., Japan's biggest real estate firm, rose 2.2 percent to 2,565 yen. General contractor Shimizu Corp. climbed 4.6 percent to 679 yen.

After the market closed, Japan's biggest paper maker, Oji Paper Co. Ltd, said it had no plans at present to change the terms of its bid for Hokuetsu Paper Mills Ltd.

Shares of Oji Paper were up 3.5 percent at 706 yen.

Trade was fairly active, with 1.70 billion shares changing hands on the Tokyo exchange's first section. Still, that was below the daily average of 1.90 billion shares for the previous three months.

Decliners outnumbered advancers 813 to 750.

Reuters