Nikkei down 1 pc as exporters, chip shares fall

Tokyo, Feb 7: The Nikkei share average lost 1.09 percent on Wednesday as investors sold shares in technology firms including Canon Inc. and other exporters after the yen bounced to a one-month high against the dollar.

Advantest Corp. and other chip-related stocks extended losses after their earnings disappointed investors.

But utility shares such as Chubu Electric Power Co. Inc.

advanced as investors bought stocks with high dividend yield amid expectations the Bank of Japan will likely keep interest rates unchanged at its policy meeting this month.

''The market is vulnerable to selling as investors are eager to take profits following corporate earnings reports that came almost in line with their expectations,'' said Takahiko Murai, general manager of equities at Nozomi Securities.

Trade was driven by movements in the futures market which was under selling pressure ahead of Friday's settlement of options contracts, he added.

The Nikkei was down 189.27 points at 17,217.59 at 0510 GMT.

The broader TOPIX index was down 0.45 percent at 1,724.64.

Canon lost 2.4 percent to 6,080 yen, while Kyocera Corp dropped 1.7 percent to 10,620 yen. Both firms earn much of their sales in overseas markets and benefit from a weak yen.

The yen stayed near one-month highs against the dollar at around 120.15 on Wednesday, supported by concerns that the currency's relative weakness may be discussed at this weekend's meeting of Group of Seven finance ministers and central bankers.

The G7 meeting remains the focus in the market as European officials have been calling for debate on the weak yen, while U.S. and Japanese officials have been playing down the issue.

Advantest, the world's largest supplier of microchip testers, slid 5.3 percent to 5,380 yen, having already fallen about 14 percent in the past month. The company posted a drop in quarterly profit late last month and lowered its full-year forecast.

The chip sell-off even hit shares of Tokyo Electron Ltd., which said on Tuesday its quarterly operating profit more than doubled.

''As a whole earnings results from chip-gear makers have not been that good,'' said Katsuhiko Kodama, senior strategist at Toyo Securities. ''Tokyo Electron's earnings results were really strong, but it has been dragged down by its peers.'' Konami Corp. jumped 7.1 percent to 3,310 yen after its earnings results prompted brokerage Credit Suisse to lift its rating on the game maker to ''outperform'' from ''neutral''.

Shares of Asahi Breweries Ltd. rose 4.8 percent to 2,005 yen after it said on Tuesday it will pay 8 million to take a 10 percent stake in tomato sauce maker Kagome Co. Ltd. and will adopt poison pill defence measures against possible hostile takeover bids.

Reuters