Nikkei flat, Sharp falls but Japan Tobacco climbs

TOKYO, Dec 13 (Reuters) The Nikkei average dipped in and out of negative territory on Wednesday with Sharp Corp. sold after it said it was under investigation over possible price-fixing for liquid crystal displays.

But Japan Tobacco Inc. extended gains for a fifth session on mounting speculation it would make a bid for British tobacco firm Gallaher Group Plc.

The Nikkei ended the morning down 6.21 points or 0.04 percent at 16,631.57, while the broader TOPIX index fell 0.23 percent to 1,632.89.

''The Nikkei didn't move much because some investors took profits in shares of steel companies and banks, but that was offset as others bought stocks seen as laggards or as undervalued,'' said Yosuke Shimizu, head of the investment information centre at Monex.

Trade volume was 743 million shares on the first section, down from last week's morning average of 928 million. Declining shares outpaced advancers by 816 to 738.

SANYO SHINPAN TUMBLES, OSE JUMPS Consumer electronics maker Sharp fell 1.7 percent to 2,035 yen after it confirmed it was being investigated by Japanese and U.S. authorities in a probe into possible price-fixing by makers of liquid-crystal (LCD) displays.

South Korea's Samsung Electronics Co. Ltd. and LG.Philips LCD Co. Ltd. are under similar probes, which sent their shares tumbling a day earlier.

A joint venture between Japan's Seiko Epson Corp. and Sanyo Electric Co. Ltd. that specialises in small LCD screens for mobile phones and digital cameras is also part of the investigation. Seiko Epson shares were down 0.3 percent at 2,970 yen, while Sanyo was flat at 165.

Another notable decliner was Dainippon Sumitomo Pharma Co.

Ltd., which tumbled 5.9 percent to 1,424 yen after Merck&Co decided to halt development of the Japanese firm's experimental drug for schizophrenia.

Consumer finance firm Sanyo Shinpan Finance Co. Ltd. tumbled 8.1 percent to 3,510 yen after the Yomiuri newspaper reported that the watchdog Financial Services Agency is likely to order it to suspend sales operations.

Japan Tobacco, seen as the company behind the takeover approach for British tobacco firm Gallaher, rose 3.1 percent to 595,000 yen. It has risen 18 percent since Wednesday's close.

Also rising was the Osaka Securities Exchange Co. Ltd. which jumped 4.8 percent to 564,000 yen. Nasdaq launched .3 billion hostile bid for the London Stock Exchange, raising speculation of a further sector shakeup.

REUTERS LL DS1106