Wednesday, August 03, 2005

Tokyo's Nikkei falls below 11,900 as Toyota sags

Tokyo's Nikkei falls below 11,900 as Toyota sags
Thu Aug 4, 2005 01:02 AM ET
(Updates to mid-afternoon)

TOKYO, Aug 4 (Reuters) - The Nikkei share average slid under the 11,900 mark on Thursday after investors -- nervous about political wrangling over Japan's postal reform bills -- sold off Toyota Motor Corp. (7203.T: Quote, Profile, Research) on weaker earnings and cashed in recent winners across the board.

A day after the Nikkei crossed the psychologically important 12,000 mark for the first time in 15 months, profit taking hit a host of recent gainers, driving the index down 0.90 percent.

All but three of the TOPIX's 33 industry sub-indices slumped into negative territory.

"I think the desire to lock in gains is the only reason investors would be selling now, when stocks are at this level," said Tsutomu Yamada, market analyst at Kabu.com Securities.

"Earnings results have been very good and consensus is growing about the strength of the economy ... I don't think this (selling) will last much longer," he added.

The Nikkei was down 107.97 points at 11,873.83 as of 0453 GMT.

The broader TOPIX index fell 0.80 percent, or 9.66 points to 1,202.36.

Worries about whether Prime Minister Junichiro Koizumi can squeeze out a victory for his postal reform bills in Japan's parliament helped put investors in the mood to take profits, Yamada said.

A vote on the bills was initially expected on Friday but could be delayed until next week, media reported.

Koizumi has said rejection of the bills would be tantamount to a vote of no-confidence, a tacit threat to call an election.

An election would likely hurt stocks because it raises the possibility of Koizumi's ruling coalition losing power, stalling policy.

Toyota fell 1.9 percent to 4,200 yen after the world's second-biggest auto maker reported a 9.7 percent fall in quarterly operating profit as an increase in investment spending outweighed brisk global sales.

Helped by expectations that auto makers would benefit from a recently lower yen, Toyota shares had risen nearly 8 percent in the past month, making the stock ripe for profit-taking.

Nippon Telegraph and Telephone Corp. (NTT) (9432.T: Quote, Profile, Research) shed 0.8 percent to 497,000 yen after it posted a 5.3 percent fall in quarterly profit on Wednesday as weakness in fixed-line units outweighed its buoyant mobile business.

Among other notable decliners, Trend Micro Inc. (4704.T: Quote, Profile, Research) tumbled 3.4 percent to 3,740 yen after UBS downgraded the stock to "neutral 2" from "buy 2".

But Konica Minolta Holdings Inc. (4902.T: Quote, Profile, Research) rose 6.8 percent to 1,064 yen after it reported a 7.3 percent rise in quarterly operating profit on Wednesday, helped by smaller losses at its camera and photographic film unit and cost cuts, and said it was on track for a full-year profit rise of 33 percent.

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