Nikkei falls, banks still weak but machinery orders help
* Machinery orders help sentiment
* Banks weak on Tepco burden concern
By Ayai Tomisawa
TOKYO, May 16 (Reuters) - Japan's Nikkei stock average fell on Monday, after jitters about global economic growth sapped appetite for U.S. and European stocks late last week, while bank stocks lost more ground on concerns about their loans to Tokyo Electric Power .
But surprisingly strong machinery orders lent support to the market, feeding hopes that reconstruction demand after the March earthquake and tsunami may support capital spending.
"The market had expected a drop in orders, so this is somewhat helping the mood," said Tomochika Kitaoka, a strategist at Mizuho Securities.
Investors also remain somewhat hobbled while Japan's earnings season continues amid much uncertainty about the outlook as supply disruptions have meant many manufacturers have not given their usual guidance, while analysts are still working out their verdicts on the ones that have.
The benchmark Nikkei average was down 0.8 percent at 9,572.51, while the broader Topix fell 1.0 percent to 831.26.
In the United States on Friday, stocks fell hit by concern about slowed growth worldwide, the coming end of a supportive Federal Reserve policy and the fear of a worsening euro-zone debt crisis are undermining the stock market's ability to maintain an upward direction. [ID:nN13152655]
Financial stocks remained weak after the government's top spokesman sparked concern on Friday that banks are likely to be asked to ease troubled Tokyo Electric Power Co's loan burden.
On Sunday, Japanese officials denied the government will ask banks to forgive loans to Tepco to help it cope with massive compensation claims arising from the crisis at the plant but investors still seemed worried.[ID:nL4E7GF015]
"Investors' concerns are mainly due to uncertainly over how much banks will have to shoulder for Tepco," said Yumi Nishimura, a senior market analyst at Daiwa Securities.
"Until there are clear indications, investors may avoid investment in banks."
Mitsubishi UFJ Financial Group shed 1.0 percent to 379 yen, Mizuho Financial Group slipped 0.8 percent to 129 yen and Sumitomo Mitsui Financial Group weakened 1.7 percent to 2,411 yen. Mizuho and SMFG also said on Friday they expect core lending activities to remain sluggish last year.
Machinery makers outperformed, with Fanuc Ltd rising 0.4 percent to 12,990 yen and Mitsubishi Heavy Industries gaining 0.5 percent to 379 yen.
Core machinery orders rose 2.9 percent in March from the previous month, Cabinet Office data showed on Monday, compared with the median estimate for a 9.6 percent decline and following a revised 1.9 percent decline in the previous month. [ID:nL4E7GG002]
Shares in Bridgestone Corp gained 2.1 percent to 1,864 yen after the tyremaker on Friday hiked its operating profit forecast for the business year to December 2011 to 167 billion yen from 140 billion yen, citing cost-cutting and higher tyre prices overseas.[ID:nT1363U1F
(Additional reporting by Antoni Slodkowski; Editing by Edwina Gibbs)
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