Nikkei flat as yen hurts exporters, drug shares up

TOKYO, Dec 1 (Reuters) The Nikkei average was virtually flat on Friday as investors bought defensive stocks in pharmaceuticals such as Shionogi and Co. Ltd. and foods, while selling exporters on a stronger yen.

''The opening was a little surprising. I think it (the fall) shows investors are worried that recent rises have been too rapid,'' said Katsuhiko Kodama, a senior strategist at Toyo Securities. ''Now we have entered December, we should pay attention to what kinds of positions, either short or long, investors will take. In November, which was an earnings month, we saw short-covering.'' The Nikkei was up 0.08 percent or 12.56 points at 16,286.89 as of 0101 GMT while the broader TOPIX index rose 0.08 percent to 1,604.27.

Shionogi was up 1.6 percent at 2,280 yen. Japan Tobacco Inc.

rose 0.4 percent to 515,000 yen.

Isuzu Motors Ltd. gained 1.7 percent to 528 yen after business daily Nihon Keizai reported that Isuzu and Itochu Corp. will invest 50 billion yen (1.8 million) to establish a sales company offering new truck sales and trade-ins.

Honda Motor Co fell 1.2 percent to 4,050 yen on the yen's rise against the dollar. A higher yen depresses exporters' earnings when transferred home.

Daiwa Securities Group Inc. fell 1.3 percent to 1,310 yen after the Nihon Keizai reported that the Financial Services Agency has decided to order Daiwa to suspend business at one of its branches for allowing insider trading by a client.

The market brushed off consumer price data released before the opening. Japanese core consumer prices rose 0.1 percent in October from a year earlier, lower than economists' consensus forecast of a 0.2 percent rise. That could dampen speculation that the Bank of Japan will lift interest rates this month.

REUTERS SBA BST0735