Nikkei edges up, Sony hits by recall

TOKYO, Aug 25 (Reuters) The Nikkei average added 0.26 percent on Friday after companies with solid earnings outlooks such as Canon Inc advanced, but worries about more signs of a slowdown in the U.S.

economy weighed on some exporters.

Sony Corp. shares fell on a new recall.

The yen fell against the dollar and the euro after Japan's consumer price index for July came in below market expectations, but it failed to give much of a boost to exporters. A weaker yen often makes their products more competitive in overseas.

''We see a tug-of-war. The benefits from the weak yen have been offset by worries about the U.S. economy,'' said Susumu Abe, manager at the information and investment department at Mito Securities Co.

The Nikkei inched up 40.89 points to 16,001.51 as of 0054 GMT, while the broader TOPIX index gained 0.14 percent to 1,625.32.

Canon rose 1.3 percent to 5,660 yen.

Shares of consumer finance companies extended losses as the latest investigation of Acom Co, which was launched on Wednesday after complaints about its loan collection practices were lodged, cast a pall over their future earnings outlook.

Acom was down 0.6 at 5,160 yen and its peer Aiful Corp. declined 4 percent to 4,610 yen, helping the other financial subindex IFINS.to become the worst-performing sector.

Shares of Sony Corp. fall 2.6 percent to 4,970 yen after Apple Computer Inc. said on Thursday it will recall 1.8 million notebook computer batteries made by Sony after nine devices overheated, causing minor burns to two users.

Investors, meanwhile, flocked to defensive stocks such as drug shares.

Japan's largest drug firm Takeda Pharmaceutical Co. Ltd. rose 0.5 percent to 7,720 yen and Daiichi Sankyo Co. Ltd. gained 1.9 percent to 3,230 yen.

Abe of Mito Securities said drug shares were supported by a report in business daily Nihon Keizai that said Takeda and Daiichi Sankyo were among top 10 companies swimming in cash, with their cash on hand exceeding interest-bearing liabilities by a wide margin.

REUTERS VJ BST0652