Nikkei down 0.7 pct as machinery data hits Fanuc

TOKYO, May 15 (Reuters) The Nikkei fell 0.69 percent on Tuesday with stocks such as industrial robot maker Fanuc Ltd. down after weak machinery orders data that rekindled concern that companies' capital spending may be losing steam.

But the market got support from auto shares such as Honda Motor Co. Ltd. on a softer yen and news that Germany's DaimlerChrysler had found a buyer for its Chrysler unit, boosting hopes for industry consolidation.

''The biggest factor driving down the market is the worse-than-expected machinery data,'' said Hiroaki Kuramochi, a managing director at Bear Stearns.

Japan's core private-sector machinery orders, a key gauge of corporate capital spending, fell 4.5 percent in March from the previous month, well below economists' consensus forecast for a 1.3 percent rise, government data showed on Tuesday.

The Nikkei finished the morning down 121.71 points at 17,556.23, and the broad TOPIX index shed 0.68 percent to 1,719.29.

A string of firms including Sony Corp. announce their earnings results this week, and the government will issue data on January-March gross domestic product on Thursday.

''Investors can't assess the Japanese economic outlook based on just one indicator, and they will closely watch the GDP data and the earnings results,'' Kuramochi said.

The yen briefly matched a three-month low against the dollar after the orders data. The dollar rose to 120.43 yen as of 0025 GMT, but later fell to 120.36 yen, almost unchanged from late U.S.

trading on Monday.

A weaker yen is a boon to companies that make the bulk of their sales abroad as it boosts profits when earnings from overseas are brought home.

Katsuhiko Kodama, senior strategist at Toyo Securities, said the DaimlerChrysler news was positive for Japanese car makers, especially small ones.

''But in reality it is unlikely we will see big-scale consolidation like that in Japan, involving Toyota or something, as many small firms already have ties with big ones,'' he said.

Trade was slow with 1 billion shares changing hands on the exchange's first section, compared with last week's morning average of 1.1 billion. Declining shares beat advancers by a ratio of nearly five to one.

MACHINERY STOCKS DOWN, AUTOS RISE Shares of Fanuc were down 1.1 percent at 11,190 yen, while machine tool maker Okuma Holdings Inc. and some other machinery stocks also fell on the weak data.

Okuma declined 2.5 percent to 1,585 yen, Mori Seiki Co. shed 1.8 percent to 3,270 yen, and Toshiba Machine Co. fell 1.6 percent to 1,135 yen.

Elsewhere, Central Finance Co. Ltd. tumbled 8.6 percent to 627 yen after the Nikkei business daily reported on Tuesday that Bank of Tokyo-Mitsubishi UFJ plans to end its capital ties with Central Finance by selling its entire 4.8 percent stake in the consumer lender.

Among gainers, Daikin Industries Ltd. jumped 4.9 percent to 4,480 yen after the commercial-use air conditioner maker posted a record profit in the year ended March 31 for the seventh straight year, and forecast further profit growth for 2007/08.

Honda rose 1.5 percent to 4,140 yen.

REUTERS AK ND1024