Nikkei loses 0.38 percent as property shares fall

TOKYO, Feb 27 (Reuters) The Nikkei average shed 0.38 percent on Tuesday as property shares such as Mitsubishi Estate Co. Ltd. slid on concern that their prices may have outpaced their potential earnings, while a firmer yen prompted selling of some exporters.

Shares in security brokers and steel producers including Nippon Steel Corp. also lost ground as investors locked in profits on recent gainers after the Nikkei ended at a seven-year high for the third straight session on Monday.

''Selling in the futures market accelerated in the afternoon session, dragging the Nikkei lower, but investors continued to buy laggards such as telecommunications shares, making the market's downside solid,'' said Hiroyuki Fukunaga, chief strategist at Rakuten Securities.

Drug companies such as Takeda Pharmaceutical Co. Ltd. and utilities also advanced as investors picked up shares with attractive dividend yields.

The Nikkei was down 69.57 points at 18,145.78 at 0523 GMT, after gaining 0.15 percent to 18,215.35, its highest close since early May 2000. The broad TOPIX index was down 0.26 percent at 1,812.30.

Shares of Mitsubishi Estate fell 3.3 percent to 3,780 yen.

The property firm has advanced nearly 50 percent during the last three months. Even after losing some ground from its lifetime high on Friday, the stock still has one of the highest price-to-earnings ratios among the Nikkei 225 HPEN225.

The price-to-earnings, or PE, ratio is one measure used to value stocks. Mitsubishi Estate has a price of nearly 60 times its estimated earnings per share, compared with an average of about 21 times for the Nikkei 225.

''There are concerns that stock prices are overheated,'' said Masayoshi Okamoto, head of dealing at Jujiya Securities. ''Mitsui Fudosan Co. Ltd. looks overpriced, but Mitsubishi Estate even more so.'' Mitsui Fudosan fell 2.2 percent to 3,490 yen after rising some 38 percent over the last three months. That is nearly 45 times its estimated earnings per share.

But shares of drug companies and utilities rose, as investors continued to home in on such stocks, which are seen as having attractive dividend yields. YLDN225.T> Takeda Pharmaceutical rose 1.5 percent to 8,310 yen. The stock has an estimated dividend yield of 1.4, above the average of 1.03 for the Nikkei 225, according to the latest Reuters data.

Likewise Astellas Pharmaceutical gained 1.5 percent to 5,320 yen, helped by a dividend yield of 1.5.

Shares of Japan's three major mobile-phone carriers rose following a brokerage upgrade.

NTT DoCoMo Inc., KDDI Corp. and Softbank Corp. all advanced after Mizuho Securities raised its ratings on the three.

Mizuho raised its rating on DoCoMo to ''2'' from ''3'' and on KDDI and Softbank to ''1'' from ''3'', analyst Atsuo Takahashi said in a research note on Monday.

REUTERS CS DS1118