Nikkei down after edging below 17,000, banks sold

Tokyo, Oct 17: The Nikkei average fell on Wednesday, briefly slipping below 17,000 for the first time in two weeks, as banks such as Sumitomo Mitsui Financial Group were sold after poor earnings results for large U.S. banks.

Shares in Sanyo Electric Co plunged 7.7 percent to 181 yen after a source familiar with the matter said the company's talks with private equity firm Advantage Partners LLP on the sale of its semiconductor unit had failed.

High-tech stocks in Tokyo had been expected to be firm after better-than-expected results from U.S. technology bellwethers Yahoo and chip maker Intel, but by midmorning the impact was seen more as general market support than buying of individual stocks.

''It's not a situation where we're seeing, say, Advantest really gaining because Intel's shares were strong,'' said Masayoshi Okamoto, head of dealing at Jujiya Securities.

''But this is helping to keep the market from dropping further in the face of the selling of bank shares and real estate that we're seeing today.'' One clear winner was Yahoo Japan, which was up to 5 percent at 51,600 yen.

But banks slid for the second straight day after disappointing results from large U.S. banks such as Wells Fargo&Co, along with record-high oil prices, dragged Wall Street lower on growing concern for corporate profits.

This followed a 57 percent tumble in third-quarter profits reported by Citigroup Inc on Monday, sparking fears that the global credit crisis may take time to resolve and making Tokyo market players wary about financial firms ahead of Japanese bank results next month.

As of 0050 GMT the Nikkei was down 0.6 percent or 97.55 points at 17,040.37. It briefly dipped as low as 16,987.54, its first foray below 17,000 since Oct. 2.

The broader TOPIX index was down by 0.6 percent at 1,616.30.

Sumitomo Mitsui Financial Group was down 2.8 percent at 850,000 and other banks also fared poorly. Mitsubishi UFJ Financial Group was down 0.9 percent at 1,049 and Mizuho Financial slipped 0.6 percent to 3,270.

Asahi Kasei Corp rose 3.7 percent to 963 yen after the Nikkei business daily reported that the company is likely to post a group operating profit of around 60 billion yen for the first half, up 18 percent year-on-year and 4 billion yen above its forecast.

The chemical and synthetic fibre maker's performance was buoyed partly by the rising price of synthetic resin material acrylonitrile, the paper said.

REUTERS>