Nikkei sheds 0.7 pct in thin trade, Matsushita up

TOKYO, May 1 (Reuters) The Nikkei share average edged down 0.72 percent in slow trade on Tuesday as investors took profits in recent gainers such as Fanuc Ltd. and TDK Corp. ahead of market holidays.

But shares of Matsushita Electric Industrial Co. and Sumitomo Metal Mining Co. advanced after they reported solid earnings late on Friday, limiting losses in the Nikkei.

Komatsu Ltd., which posted 50 percent growth in group operating profit last business year, was among the most actively traded shares by turnover on the Tokyo exchange's first section AM.Its price hit a record high 2,945 yen.

''Investors picked up shares of companies that are benefiting from rapid growth in emerging markets, such as Komatsu and Nippon Steel,'' said Kenji Kobata, managing director in the research department of Ace Securities.

''Given a slowdown in the U.S. economy, investors are focusing on Japanese exporters that earn much of their sales in China and other developing countries,'' he said.

The Nikkei ended down 125.43 points at 17,274.98. The broad TOPIX index fell 0.46 percent to 1,693.25.

Yoshinori Nagano, a senior strategist at Daiwa Asset Management, blamed the poor performance of the Nikkei on a lack of support from corporate earnings reports.

''Companies have so far posted profit rises of about 10 percent for last business year and forecast a slight increase for the current year,'' he said. ''They are almost within our expectations, and failed to create a bullish mood in the market.'' The Tokyo market is also capped by concerns about a possible correction to a record-breaking rally in overseas equity markets and selling of Japanese shares by foreign hedge funds, he said.

Trade volume hit its lowest in more than a week, with just 1.79 billion shares changing hands on the Tokyo exchange's first section.

Decliners beat advancers 966 to 634.

HOLIDAY LULL Market participants said trade was likely to remain sluggish in the next few sessions, as Japan is in the midst of its Golden Week holidays. Japanese markets were closed on Monday and will also be closed on Thursday and Friday.

Gross domestic product data on May 17 was likely to be a focus for investors.

''Recently Japanese economic indicators have been somewhat poor.

Investors want to see GDP data on the 17th. Until then we just have to hang in there,'' said Hiroyuki Nakai, chief strategist at Tokai Tokyo Securities.

Among notable losers, Kansai Electric Power Co. Ltd. fell 4.5 percent to 3,210 yen after it posted an 8.1 percent drop in net profit on Friday for the business year ended March 31 due partly to high fuel costs for its thermal power plants. It expects a further fall of 21 percent in the current year.

Shares of Fuji Heavy Industries Ltd. lost 2.0 percent to 583 yen after the maker of Subaru autos posted a larger than expected 18 percent drop in operating profit for 2006/07, and forecast a 27 percent drop in profit this year.

But Matsushita shares rose 3.2 percent to 2,400 yen. The maker of Panasonic goods reported an 11 percent rise in annual profit on Friday for 2006/07 on brisk sales of plasma TVs.

NTT DoCoMo Inc., Japan's top mobile phone carrier, advanced 2.0 percent to 209,000 yen after it said on Friday it planned to raise its annual dividend payout to 4,800 yen from 4,000 and proposed share buybacks worth up to 200 billion yen ($1.7 billion) at a shareholders meeting in June.

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