Techs shake Japan stocks

[notiCIas]

Techs shake Japan stocks

Nikkei down 1.3% as investors fret about further U.S. rate hikes.

July 6 2006: 3:58 AM EDT


TOKYO (Reuters) -- The Nikkei average fell 1.3 percent Thursday as investors sold Advantest Corp. and other technology stocks amid growing concerns about further rate hikes in the United States, a major Japanese trade partner.

Credit Saison Co. Ltd. and other consumer finance firms tumbled after a government advisory group recommended slashing the maximum interest rate they can charge to borrowers.


Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management Co. Ltd. said some are concerned over a possible interest rate hike by the Federal Reserve and any resulting slowdown in the U.S. economy.

"If the jobless data comes out strong, fueling inflationary fears, that might bring us back to May and June levels when the stock markets logged sharp falls," he said, referring to June payrolls data due on Friday.

The Nikkei lost 202.54 points to 15,321.40, extending its fall to a second session. The TOPIX index was down 1.1 percent at 1,572.29.


The Nikkei had climbed nearly 1,500 points since it hit this year's low of 14,045.53 on June 14, so it was ready for some profit-taking, said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Securities Co. Ltd.

Kenichi Hirano, general manager of the information department at Tachibana Securities, said the chance of interest rate hikes in Japan was also weighing on the market.

A majority of market players expect the Bank of Japan to raise interest rates, currently at zero, at a policy meeting next week.

"Many Japanese financial institutions hold masses of government bonds, and I'm sure rate hikes will be mild so the bond market won't crash," he said. "Nonetheless, people have to be nervous when interest rates go up."

Analysts said the impact of North Korea's missile tests Wednesday appeared to be limited as none of the missiles traveled as far as Japan.

"The incident won't affect investors' behavior unless it develops into something more complicated such as the United States taking military action or the tension between the U.S. and China heating up," said Ichiyoshi's Akino.

Consumer finance issues weak
Shares of consumer finance companies were hit after an advisory committee to the ruling Liberal Democratic Party called for a cut in the maximum interest rate charged to borrowers to 15-20 percent from the current 29.2 percent.

The move also weighed on some retailers that run consumer loan businesses.

Credit Saison shed 5.6 percent to ¥4,750. Takefuji Corp. dropped 5.7 percent to ¥6,240 and Aiful Corp. was down 4.6 percent at ¥5,340.

Marui Co. Ltd., a department store that also issues credit cards, fell 4.1 percent to ¥1,653.

In the technology sector, Advantest Corp., a maker of microchip testing devices, gave up 2.2 percent to ¥11,720, following drops in U.S. chip stocks.

Nikon Corp. ended down 1.5 percent at ¥2,010 after a top executive told Reuters he was concerned that a possible build-up of liquid crystal display inventories could hurt its LCD stepper sales but that demand for chip steppers looked strong.

Meanwhile, consumer electronics maker Sony Corp. told Reuters that it expected its sales in China to slow this year. Sony ended down 1 percent at ¥5,010.

Major Japanese corporations will start reporting their fiscal first-quarter earnings results and forecasts later this month, but Takahiko Murai, general manager of equities at Nozomi Securities, said higher oil prices and other raw material costs may keep them from raising their projections.

"There aren't many factors that allow companies to lift their forecasts," he said.

Don Quijote Co. Ltd. plunged 5.7 percent to ¥2,495 after the discount retailer late Wednesday announced an issuance of ¥20 billion worth of convertible bonds, triggering concerns about dilution.

Another notable loser was Nitto Denko Corp., a liquid crystal display components maker, which fell 3.5 percent to ¥7,550, adding to a 4.2 percent fall in the previous session.

Deutsche Securities on Wednesday lowered its estimates on Nitto Denko's earnings for the year to March 2007 due to "a greater-than-expected Taiwan-centered LCD market correction".

Trading volume was nearly unchanged from the previous session, with 1.52 billion shares changing hands. Decliners outnumbered advancers by a ratio of four to one.