Nikkei slips before U.S. elections, but Toyota gains

Mon Nov 5, 2012 7:18am GMT

* Toyota lifts mood in automakers
    * USD/JPY drops below 80.500

    By Ayai Tomisawa
    TOKYO, Nov 5 (Reuters) - Japan's Nikkei fell on Monday, as
the yen recouped some earlier losses, prompting investors to
take profits from last week's gain while investors shunned risk
before the winner of a tightly fought U.S. election is known.
    But Toyota Motor Corp rose 2.2 percent to a
one-month high at 3,210 yen after public broadcaster NHK said it
was set to slightly raise its operating profit forecast.
 
    After the market close, the automaker raised its full-year
net profit forecast to $9.7 billion even after its sales in
China, the world's biggest autos market, were battered by
protests against Japan over a territorial dispute.
 
    The Nikkei was down 0.5 percent to 9,007.44, while
the broader Topix was 0.6 percent lower at 747.95.
    Analysts said that although the weak-yen trend lends support
to the market to some extent, investors still do not want to buy
blue-chip electronics stocks as many of them cut their full-year
outlooks.
    "Investors are not still past the shocks from bad earnings.
But once such pessimism is priced in, investors will likely
gradually chase the market higher towards the end of the year,"
said Hiromichi Tamura, chief strategist at Nomura Securities.
    "Investors may stay cautious on export-sensitive electronics
stocks, but the overall market will likely be supported by
buying in material stocks like steelmakers."
    Panasonic Corp, which tumbled last week as the
electronics maker startled the market with a massive loss
outlook, extended losses, ending down 5.6 percent at 388 yen.
    Sharp Corp dropped 6.7 percent to 154 yen, hitting
a two-week low after Fitch Ratings downgraded the struggling TV
maker's credit rating by six notches to B-minus after the market
close on Friday.
    Sharp warned on Thursday of a $5.6 billion net loss for the
business year and said it might not be able to survive on its
own.
    Analysts said that a softer yen would continue to alleviate
pessimism on poor earnings and that the Nikkei should trade
between 8,950 and 9,100 in the next few days.
    "The presidential election will likely set the tone for the
currency market. If the dollar rises to 81 yen, investors may
chase the market to around a September closing high of 9,200
over the next month or so," said Toshihiko Matsuno, senior
strategist at SMBC Friend Securities. 
    The yen was quoted at 80.365 to the dollar on Monday
afternoon, slightly higher than the pair which stayed above
80.500 earlier.
    Helped by the upbeat mood in Toyota, Honda Motor Corp
 added 1.2 percent to 2,497 yen and Nissan Motor Corp
 gained 0.7 percent to 691 yen.
    Amid sluggish global growth, company earnings have been weak
this quarterly reporting season. About 56 percent of the 101
Nikkei companies that have reported earnings undershot market
expectations, according to Thomson Reuters StarMine. That
compared with 54 percent in the previous quarter.
    Yamada Denki Co fell 7.5 percent to 3,170 yen after
the home electronics retailer slashed its operating profit
forecast for the year ending March 2013 by 39 percent to 57.3
billion yen, citing weaker sales.
    Shares of eAccess Ltd surged 13 percent to 51,600
yen, a 19-month high, after mobile operator Softbank Corp
 said on Friday it would change its share swap ratio
with eAccess, which it acquired in a $1.84 billion deal at the
start of last month. 
    The benchmark Nikkei is up 6.5 percent this year, trailing a
12.5 percent rise in the U.S. S&P 500 and a 12.4 percent
gain in the pan-European STOXX Europe 600 index.
    Volume was low, with 1.46 billion shares changing hands,
compared to Friday's 1.88 billion shares.