Nikkei down 0.5 pc as banks fall, China in focus

Tokyo, May 24: The Nikkei average snapped a three-day winning streak on Thursday as investors took profits in recent gainers such as Mitsubishi UFJ Financial Group Inc. after a fall in U.S. markets and on cautious trade before the open in China.

Katsuhiko Kodama, senior strategist at Toyo Securities, said investors are being cautious before the start of trade in the Chinese market after former Federal Reserve Chairman Alan Greenspan warned about Chinese stocks.

''Investors know that Chinese stocks are obviously experiencing a bubble, and they are worried about when that will burst,'' he said.

''The market is largely weighed down by profit-taking on investor concern that megabanks and Sony have risen rather too quickly,'' he added.

Greenspan said he feared a ''dramatic contraction'' in Chinese stocks after the recent boom, adding the run-up was ''clearly unsustainable.'' The Nikkei was down 0.47 percent, or 83.36 points, at 17,621.76 as of 0114 GMT. The broader TOPIX index lost 0.65 percent to 1,728.72.

Mitsubishi UFJ Financial Group fell 2.1 percent to 1.38 million yen after the world's largest banking group by assets reported a 25.5 percent drop in annual profit on Wednesday, hurt by weakness in its core lending business, and said earnings would likely decline further this year.

Japanese lenders Mizuho Financial Group Inc. and Sumitomo Mitsui Financial Group Inc. also lost ground after recently rising on earnings recovery hopes this year.

Mizuho, Japan's second-largest bank, was down 0.7 percent to 841,000 yen, while Sumitomo Mitsui declined 1.7 percent to 1.16 million yen.

Shares of Sony Corp. were down 1.3 percent at 7,010 yen.

Reuters>