Nikkei rises 0.4 pct on currency intervention threat but gloom lingers
* Fast Retailing, Softbank lend support on brokerage reports
* Yen's gains hurt exporters; Sharp, Sony at 3-decade low
* Printer makers also hit after Lexmark earnings
* Steelmakers sag on poor outlook, downgrades
By Sophie Knight
TOKYO, July 17 (Reuters) - Japan's Nikkei share average rose on Tuesday after the finance ministry, reacting to the yen hitting a one-month high against the dollar, warned that it would intervene if necessary to curb excessive movements in the currency market.
However, the index was propped up by just a few heavyweights, while the broader Topix index fell as investors remained concerned about stuttering global growth amidst warnings of disappointing first-quarter revenues.
The Nikkei rose 0.4 percent to 8,755.00, reversing an early loss, after Finance Minister Jun Azumi's warning on intervention in the currency market. His remarks came as the yen held onto Monday's one-month high against the dollar and stayed close to an 11-1/2 year high versus the euro.
"I think the market is adjusting after recent losses and could have bottomed out as it approaches its 50 percent retracement of its recent rally," said Yoshihiro Ito, chief strategist at Okasan Online Securities.
The Nikkei is close to 8,669, where it would have erased half of its gains between June 4 and July 4.
Heavyweight Fast Retailing Co Ltd lent support to the index on Tuesday, rising 4.8 percent after Nomura Securities praised its discount pricing strategy at its Uniqlo stores. Still, the brokerage maintained its "neutral" rating for the retailer, warning that only an increase in sales would warrant a reassessment.
Domestic defensive favourite Softbank also propped up the benchmark index, advancing 1 percent to a one-year high after Goldman Sachs hiked its target price to 3,550 yen from 3,000 yen. The brokerage also lifted its operating profit forecasts for Softbank's fiscal 2013-2015, identifying the introduction of the iPhone 5 as a potential upside factor for the stock.
But major exporters and consumer electronics makers were hit by concerns about further yen strengthening, with Sharp falling 5.7 percent to a 34-year low and Sony off 3.4 percent to its lowest point in more than three decades.
"The yen's gains are weighing on Tokyo shares. For global shares to rise, investors will probably need more stimulus and an improvement in economic sentiment," said Shun Maruyama, chief strategist at BNP Paribas.
The Nikkei fell 3.3 percent last week as several U.S. companies warned ahead of earnings season that first-quarter profits would undershoot expectations as stuttering global growth exerts a more damaging influence than expected.
Japanese printer makers tumbled after their U.S. rival Lexmark International Inc was the latest in a string of technology companies to warn of dwindling sales in Europe.
Seiko Epson fell 7.4 percent to close at a record low while Canon dropped 3.1 percent to end near a three-year low. Ricoh was down 3.8 percent.
Japan's corporate earnings reporting season will get into high gear from next week, but some see the downside risk as limited.
"At the moment, few people would expect profit forecasts to be cut by 10-20 percent. So a further fall in the Nikkei would not be that big," said BNP Paribas' Maruyama, adding that it could drop to 8,500, but not approach its June closing low of 8,295.
Investors are awaiting an appearance at the U.S. Congress appearance by Federal Reserve chairman Ben Bernanke, later on Tuesday and Wednesday, to present his semi-annual monetary policy report. A surprise decline in U.S. retail sales boosted speculation of further stimulus measures from the Fed. ]
"The trouble is that more quantitative easing from the U.S., if it did come, would only make the yen stronger," said Ito of Okasan Securities. "But the finance ministry isn't going to do anything yet, it's just the same old refrain," he added, referring to Azumi's warning on Tuesday.
The broader Topix dropped 0.4 percent to 743.38.
Steelmakers were out of favour, with the sector falling 4.3 percent> It was dragged down by Tokyo Steel Manufacturing Co Ltd, which sank 14.4 percent after the company on Friday widened its operating loss forecast for the first quarter to 6 billion yen ($76 million), six times its previous forecast. JPMorgan slashed target price and earnings forecasts for the company.
Fellow steelmaker Yamato Kogyo lost 4.7 percent after Nomura downgraded the company to 'neutral' from 'buy,' citing growing competition in the H-beams market.
(Additional reporting by Hideyuki Sano; Editing by Richard Borsuk)
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