Nikkei down 0.7 pct as exporters, metal stocks fall

TOKYO, June 13 (Reuters) The Nikkei average lost 0.71 percent on Wednesday following a fall in U.S. stocks, while metal shares such as Sumitomo Metal Mining Co. Ltd. declined after a slide in metal prices.

A sharp drop on Wall Street, in part due to a rise in bond yields to their highest in five years, stoked fears that higher borrowing costs could cut into corporate profits and choke off growth in a key market for Japanese products.

''Exporters are down following New York stocks, and profit-taking is also weighing on metal stocks after their rally,'' said Zenshiro Mizuno, senior managing director at Marusan Securities.

On Tuesday, nickel fell more than 6 percent and copper shed more than 2 percent after a slowdown in Chinese imports and a fall in global equity markets dampened sentiment.

''Investors are holding back as they are worried that higher interest rates, sparked by inflation concerns, could slow down solid economies,'' Mizuno said.

In Japan, the benchmark 10-year yield rose 5.5 basis points to 1.980 percent on Wednesday, its highest level since July.

The Nikkei was down 125.39 points at 17,635.52 as of 0044 GMT, and the broader TOPIX index declined 0.84 percent to 1,736.84.

Exporters fell with Canon down 1 percent at 7,080 yen and Kyocera Corp. falling 0.8 percent to 12,200 yen.

Dowa Mining Co. Ltd., a nonferrous metal manufacturer, dropped 3.4 percent to 1,210 yen, one of the stocks most affected by a slide in metal prices.

Copper smelter Sumitomo Metal Mining tumbled 4 percent to 2,625 yen, while Toho Zinc Co. Ltd. lost 2.2 percent to 1,107 yen.

Trading houses, which have large investments in the metal industry, were also hit, with Mitsubishi Corp. down 2.8 percent at 3,100 yen and Mitsui&Co. falling 2 percent to 2,395.

Elsewhere,CSK Holdings Corp., an information services company, rose 1.4 percent to 4,240 yen.

The company lifted its group net profit forecast on Tuesday for the year ending March 2008 to 20 billion yen (4.5 million), up 11.1 percent from its previous forecast after winning some court rulings regarding taxes.

Reuters DKS VP0715