Nikkei falls on US worry, Casio hit by forecast

Tokyo, May 11: The Nikkei average sank 1.03 per cent today as Casio Computer Co tumbled on a downbeat forecast and broker downgrades, and investors sold high-tech exporters such as Sony Corp on growing concerns about the US economic outlook.

Yokogawa Electric Corp. and Konica Minolta Holdings Inc. were also major drags on the Nikkei, as investors sold them following their earnings reports.

After the steepest fall in U.S. stocks in two months, foreign investors actively sold TOPIX core 30 shares, said Takahiko Murai, general manager at Nozomi Securities.

''As Japanese institutional investors stay reluctant to put fresh funds into domestic stocks, the Nikkei is vulnerable to foreign selling,'' he said.

The Nikkei closed down 183.24 points at 17,553.72. The broad TOPIX index shed 0.80 percent to 1,723.09.

Casio Computer plunged 16.5 percent to 2,025 yen, becoming the largest drag on the Nikkei and the biggest percentage loser on the Tokyo bourse's first section.

It was also the biggest daily percentage loss in more than two decades for the world's ninth-largest digital camera maker.

Casio posted an 11.5 percent rise in annual operating profit after the market closed on Thursday. But its forecast of a profit of 53 billion yen (0 million) for the business year to March 2008 was far below a consensus of 62 billion yen in a poll of 16 analysts by Reuters Estimates.

JP Morgan downgraded Casio to ''neutral'' from ''overweight'' and lowered its price target to 2,425 yen from 2,500 yen. Other brokerage firms including Mizuho Securities also downgraded Casio.

''Casio shares were sold heavily as they were dealt with the double blow of a downbeat earnings report and a negative view about the U.S. economy,'' said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.

HIGH-TECH SHARES FALL

Shares of other electric machinery makers also declined, as investors viewed the retreat in U.S. stocks as a reflection of worsening market sentiment towards the U.S. economy, the main destination of Japanese exports, Akino said.

Canon Inc. lost 1.9 percent to 6,910 yen, while Sony shed 1.7 percent to 6,450 yen.

''The Tokyo market is factoring in the possibility that U.S.

shares could fall further later in the day if retail sales data shows weakness,'' Akino said.

Market participants were looking to U.S. producer price and retail sales data for April on Friday for clues on the health of the economy after the Federal Reserve said it was still concerned about inflation.

''On top of the fact that investors were already cautious before another peak of earnings announcements next week, it is unavoidable for Japanese stocks to fall on U.S. stocks,'' said Tsuyoshi Segawa, an equity strategist at Shinko Securities.

Among other notable losers, office equipment maker Konica Minolta Holdings Inc. fell 7.6 percent to 1,574 yen as Mizuho Securities cut its rating on the stock by one notch to ''3'', saying its share price had reached the brokerage's target.

Yokogawa Electric tumbled 15.8 percent to 1,602 yen after the company said net profit for last year missed its forecast and it set the outlook for this year lower than market expectations.

Yokogawa's group net profit fell 41.7 percent to 12.6 billion yen (5.1 million) for the year ended March 31, below its estimate of 15 billion yen.

Trade was active with 2.3 billion shares changing hands on the Tokyo exchange's first section. Declining shares outnumbered advancers by a ratio of nearly four to one.

REUTERS

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