Nikkei pulls back from 33-month high; Canon, SMFG rise

Thu Jan 31, 2013 1:19am GMT

* Nikkei still heading for best January performance since
1998
    * Lender SMFG jumps after 9-mth earnings top full-yr f'cast
    * Nintendo sags after forecasting 2nd year of loss
    * Two-thirds of Nikkei firms reporting earnings so far miss
market f'cast

    By Dominic Lau
    TOKYO, Jan 31 (Reuters) - Japan's Nikkei average dipped on
Thursday, with investors booking profits after it had risen
sharply in the previous session to end above 11,000 for the
first time in 33 months.
    But gains in camera and printer maker Canon Inc and
lender Sumitomo Mitsui Financial Group, after their
quarterly results, capped losses. 
    The Nikkei eased 0.2 percent to 11,093.94, but is
still up 6.7 percent so far this month, on track for its best
January performance since 1998, after rallying 22.9 percent in
2012. 
    "It's too early to take profit," a trader at a foreign bank
said. "People should look for names which are still undervalued,
still haven't moved (in line with the rally) and could
outperform."
    Most of the gains last year came in the final six weeks, as
the yen weakened after Prime Minister Shinzo Abe called on the
central bank to ease policy more aggressively in his election
campaign.
    Index heavyweight Canon advanced 0.9 percent on Thursday
after it forecast a 26.6 rise in operating profit this year as
it cuts costs and gets a boost to revenues from a weakening yen.
 
    Sumitomo Mitsui Financial Group climbed 4 percent after its
ninth-month earnings handily beat its operating profit forecast
for the full-year ending March. 
    Rivals Mitsubishi UFJ Financial Group and Mizuho
Financial Group both gained 2.8 percent.
    Despite the weaker yen, companies have so far reported
lacklustre earnings for the October-December quarter. Of the 26
Nikkei companies that have announced quarterly results so far,
nearly two-thirds have missed market expectations, according to
Thomson Reuters StarMine. That compared with 56 percent in the
previous three months.
    Chip-making equipment maker Advantest Corp was
among those that reporting weaker-than-expected earnings this
quarter. The stock lost 3.3 percent after it announced its
third-quarter earnings and cut its full-year operating profit
forecast after the market close on Wednesday.
    Video game maker Nintendo Co Ltd dropped 4.2
percent after it said it would post an operating loss for a
second straight year as sales of the Wii U, the successor to its
Wii console, faltered. 
    The broader Topix index added 0.3 percent to 937.29.
    The softer yen, which is expected to boost exporters'
earnings, has boosted the appeal of Japanese equities, with
foreign investors remaining net buyers last week for an 11th
consecutive week. They bought a net 248.6 billion yen ($2.73
billion) worth of equities in the week through Jan. 26, data
from the Ministry of Finance showed.
    Driven by the recent rally, Japanese equities are slightly
more expensive than their U.S. peers. The Topix carries a
12-month forward price-to-earnings ratio of 13.4, versus the
U.S. S&P 500's 13.3 and the pan-European STOXX Europe
60's 11.9, data from Thomson Reuters Datastream showed.