Nikkei down on weak output data, China in focus

TOKYO, May 30 (Reuters) The Nikkei average fell 0.2 percent on Wednesday morning, led by electronics makers such as TDK Corp.

after data showed industrial output unexpectedly dropped in April, raising concern about slowing U.S. demand.

Investors were taking a cautious tack after China's Ministry of Finance raised its duty on stock trading, sending the benchmark Shanghai Composite Index down 5.7 percent before it pared some of its losses.

Market participants are concerned that Chinese equities, which have hit record highs, could see a steep sell-off, hurting markets around the world.

''The concern is that at some point we are going to see a fall in Chinese stocks,'' said Toshihiko Matsuno, assistant general manager of investment research at SMBC Friend Securities.

''That's what everyone is watching out for.'' The Nikkei finished the morning down 41 points at 17,631.56, while the broader TOPIX index slipped 0.14 percent to 1,735.55.

The Tokyo exchange had its most active morning of trade in a week, with 1.01 billion shares changing hands. The number of advancing shares and declining shares was roughly the same.

TDK DOWN Shares of TDK fell 1 percent to 10,790 yen. Shares of Kyocera Corp., another maker of electronic components, fell 1.4 percent to 11,660 yen.

Government data showed on Wednesday that industrial output fell 0.1 percent in April from March, compared with a consensus market forecast for a 0.5 percent increase.

That added to concern that output growth may be losing momentum due to a slowdown in demand from the United States.

''Clearly, production is weak at the moment,'' said Hideyuki Suzuki, investment information manager at SBI Securities.

Shares of Fast Retailing Co. Ltd. rose 2.8 percent to 9,260 yen after brokerage Goldman Sachs lifted its rating on the clothing retailer to ''neutral'' from ''sell'' and removed the stock from its Japan ''sell'' list.

The outlook for the company's earnings has improved, Goldman said in a note to clients on Wednesday, due to increased product recognition and market share expansion.

Shares of Sumitomo Metal Industries Ltd. advanced 2.3 percent to 655 yen after the steelmaker said on Tuesday it would buy back up to 110 million of its own shares, or up to 70 billion yen (5.4 million) worth, from May 30 to Dec. 20.

REUTERS SKB PM0930