Nikkei down 1 pct on Wall St fall, stronger yen

Tokyo, July 11: A tumble in US stocks and a stronger yenpushed the Nikkei average 1.05 per cent lower on Wednesday, withinvestors selling a wide range of stocks including high-tech exporterssuch as Sony Corp. that had led the market's recent rally.

NEC Electronics Corp. was untraded due to a glut of buy orders at3,670 yen, up 16 percent from Tuesday's close, after the Nikkeinewspaper said U.S. investment fund Perry Capital has offered to buy anadditional 25 percent stake in the struggling Japanese chip maker fromparent NEC Corp. for 5,000 yen a share.

The market appears susceptible to external factors such as U.S.stock moves and the currency as investors hold back ahead of a Japaneseelection later this month, said Hiroaki Kuramochi, managing director atBear Stearns.

''Investors are turning cautious following a big drop in U.S.

stocks and the stronger yen,'' he said. ''Profit-taking is weighing on stocks that had risen on the currency.

''The market is closely watching whether the yen will become evenstronger, and there's a possibility for the Nikkei to drop to 18,000 atsome point.'' As a July 29 election for half the seats in the upperhouse of Japan's parliament approaches, public support for PrimeMinister Shinzo Abe's government has tumbled below 30 percent amidfinancial scandals and voter anger over missing pension records.

The loss of a majority in the upper chamber by the ruling camp could threaten political paralysis and delay legislation.

The benchmark Nikkei finished the morning down 191.72 points at 18,060.95.

The broader TOPIX index slipped 1.14 percent to 1,768.77.

Against the yen, the dollar fell to a one-month low of 120.99 onelectronic trading platform EBS before pulling back to 121.60 yen, down0.10 percent from late New York trade.

''I do feel that global equities are heading into a short-termcorrection,'' said Koichi Ogawa, chief portfolio manager at Daiwa SBInvestments.

''The yen will likely strengthen. It had become unreasonably weak, reflecting retail investors' buying of foreign currencies. It probably wouldn't be a bad thing for the yen to strengthen alittle bit.'' Trade volume grew with 976 million shares changing handson the Tokyo exchange's first section, compared with last week'smorning average of 835 million.

Declining shares outnumbered advancers by a ratio of more than six to one.

EXPORTERS, AUTOS DOWN

Shares of high-tech exporters tumbled, withSony down 1.9 percent at 6,340 yen, while Canon Inc. declined 1.3percent to 7,030 yen and Kyocera Corp. fell 1.1 percent to 12,900 yen.

Auto shares were also down. Toyota Motor Corp. lost 1.4 percent to7,680 yen and Honda Motor Co. Ltd. retreated 1.6 percent to 4,460 yen.

A stronger yen weighs on exporters as it cut Aeon Co. Ltd. fell2.9 percent to 2,200 yen after Japan's second-biggest retail group saidon Tuesday that quarterly operating profit fell 16 percent due to poorsales at its U.S.

apparel unit Talbots Inc. and some goodwill charges.

Among gainers, Creed Corp. jumped 7.6 percent to 311,000 yen afterthe real estate investment firm issued a forecast on Tuesday for a 21percent rise in net profit to 5.6 billion yen ( million) for theyear to May 2008, following an 11 percent profit gain the previous year.

Shares of Kimura Chemical Plants Co. Ltd. surged 10.9 percent to1,640 yen after the International Energy Agency forecast a global oilsupply crunch ahead, leading to expectations of growing business forthe maker of nuclear reactor vessels.

Reuters>