Nikkei books biggest one-day fall since November

TOKYO, Jan 5 (Reuters) The Nikkei share average booked its largest one-day percentage fall in six weeks on Friday, dropping 1.51 percent as investors took profits in Honda Motor Co. Ltd. T>, steel firms and others that logged aggressive gains in a year-end rally.

Exporters such as Honda and Fanuc Ltd. were also hurt by gains in the yen, which rose on speculation the Bank of Japan could lift interest rates as early as this month, while energy firms were hit by a decline in oil prices.

The Tokyo market will be closed on Monday in observance of a national holiday. Normal trade will resume on Tuesday.

Investors were looking to lock in profits after the Nikkei hit an eight-month closing high in the previous session.

''The market has risen considerably of late, so I think investors see this as a good place to take profits,'' said Katsuhiko Kodama, a senior strategist at Toyo Securities.

''But right now the currency is the main factor.... For the short term at least it is hard to read what is going to happen in the currency market.'' The Nikkei slid 262.08 points to 17,091.59, its lowest close since Dec. 21 and its biggest one-day percentage drop since Nov 20.

The broader TOPIX index fell 1.39 percent to 1,675.33.

The benchmark Nikkei surged nearly 6 percent last month as Japanese stocks staged a year-end rally after months of underperformance compared with other major equity markets.

The Dow Jones industrial average rose less than 2 percent in December, while London's FTSE 100 gained less than 3 percent.

Honda fell 3 percent to 4,600 yen. The auto maker had gained nearly 19 percent in the past month.

Steel makers such as Nippon Steel also logged big losses. Nippon Steel fell 5.4 percent to 628 yen after surging nearly 26 percent over the past month.

Fanuc, a maker of industrial robots, fell 2.7 percent to 11,430 yen, hurt in part by gains in the yen.

A stronger yen is a minus for firms that make the bulk of their sales abroad because it eats into profits when earnings from abroad are brought home.

The yen was up 0.6 percent against the dollar and more than 1 yen against the euro on Friday.

Oil developer INPEX Holdings Inc. slipped 2.6 percent following crude oil's nearly 9 percent tumble over the past two days.

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