Nikkei slips as Fast Retailing falls, futures down

TOKYO, Jan 11 (Reuters) The Nikkei share average lost 0.62 percent on Thursday as Fast Retailing Co. Ltd. fell ahead of its earnings report, while falls in Nikkei futures also pressured the market.

Among the day's gainers, Tokyo Electron Ltd. picked up on higher orders for its chip-making gear.

''The losses in the Nikkei yesterday and today were due mainly to selling of futures contracts before Friday's settlement,'' said Masaki Iso, chief investment officer at Yasuda Asset Management.

Concerns that the Bank of Japan may raise interest rates at its policy meeting on Jan. 17-18 also prompted investors to take profits, Iso said.

But he added that the market is still on an uptrend, backed by healthy corporate earnings and steady economic growth.

The Nikkei fell 104.23 points to 16,838.17, its lowest close since Dec. 19. The fall followed a 1.71 percent drop the previous session.

The broader TOPIX fell 0.38 percent to 1,656.72.

Nikkei futures expiring in March were down 0.5 percent at 16,860 in Osaka.

Some said a drop in oil prices to a 19-month low was prompting hedge funds to sell futures and stocks to compensate for losses in the energy market.

U.S. crude oil futures fell below on Thursday for the first time since June 2005 as exceptionally warm temperatures in the U.S. Northeast have hit winter fuel demand.

''Buying by foreigners fuelled the latest rally in the Tokyo market. If they sustain losses from investments in the energy market, it should have an impact on Japanese equities,'' said Hiroyuki Fukunaga, chief strategist at Rakuten Securities.

Foreign investors were net buyers of Japanese stocks for six straight weeks up to Dec. 22, helping the Nikkei climb to the highest level in seven months, the latest data from the Tokyo Stock Exchange showed.

Trade volume was little changed from Wednesday, with 2.07 billion shares changing hands. Decliners outnumbered advancers by 858 to 719.

FAST RETAILING, FUJIYA DOWN Fast Retailing fell 1.4 percent to 11,110 yen. After the close of trade, the operator of Uniqlo casual-wear shops said it had lowered its full-year profit forecast by 8 percent as discount sales hurt its profitability.

For the year to August, the company lowered its profit forecast to 41 billion yen from its October forecast of 44.5 billion. The consensus projection in a poll of 13 analysts by Reuters Estimates was for 44.9 billion yen.

Shares in Fujiya Co. Ltd. lost 9.4 percent to 211 yen after the confectioner said it was halting output at its factories and stopping confectionery sales at its stores in Japan after finding it had shipped about 2,000 cream puff products using milk that was past its sell-by date.

But Tokyo Electron, which produces tools used to make microchips, gained 1.2 percent to 8,960 yen. Orders for its chip-making equipment rose 6.6 percent in October-December from the previous quarter to a six-year high, it said on Wednesday.

Shares of Oji Paper Co. and other Japanese paper makers rose after Credit Suisse raised its rating on the sector to ''overweight'' from ''market weight'', citing expectations for higher profits due to lower oil prices and industry alliances.

Data from KDDI Corp., the country's No. 2 phone operator, showed on Thursday that it signed up more mobile phone users in Japan last month than bigger rival NTT DoCoMo Inc. and newcomer Softbank Corp. for the fifth straight month.

KDDI added a net 297,500 mobile phone users last month, likely thanks to its music download service and high-quality network.

Nevertheless, KDDI shares closed down 1.8 percent at 784,000 yen, while Softbank was flat at 2,485 yen and DoCoMo was up 1.1 percent at 192,000 yen.

REUTERS CS DS1410