* Sony jumps on Citigroup upgrade * Last quarter earnings expected to be poor * Advantest sags on report of disappointing earnings By Sophie Knight TOKYO, Jan 28 Japan's Nikkei share average briefly struck a fresh 32-month high above 11,000 on Monday morning on a weaker yen, before heading down into negative territory by the midday break as investors awaited further cues from local earnings. The benchmark inched down 0.1 percent to 10,917.40 after initially leaping to 11,002.86 as interest in Japanese exporters was fanned as the yen dropped to 91 versus the dollar, promising higher overseas revenues once they are repatriated. Among those seeing fat gains was Sony Corp, which jumped 8.8 percent after Citigroup raised its rating to "buy" from "neutral", saying the softer yen has enabled Sony to take more risks on operations such as the home appliance business. "The potent mix of 'Abenomics' and strong risk appetite abroad is continuing to soften the yen, which means investors are still buying stocks," said Masayuki Doshida, senior market analyst at Rakuten Securities. "However, it may be difficult for investors to move before they see how much the weaker yen will improve Japanese companies' performance," Doshida said. "The benchmark faces resistance around the 11,000 level." With Japan's earnings season getting into full swing this week, investors are hoping that the yen's more than 10 percent fall against the dollar in the past two months will improve Japanese companies' forecasts in the year to come. But the yen effect may not be enough to offset slowing demand in China, exacerbated by a diplomatic spat that chilled interest in Japanese products, as well as an ongoing EU debt crisis that has severely crimped consumption in the region. Industrial robots maker Fanuc Ltd, which had shed 5.3 percent by the midday break, cited both of those reasons when it cut its operating forecast for the year ending March by almost 20 percent to 178 billion yen ($2 billion) after the bell on Friday. Fanuc also said its operating profit for the nine months ended December had dropped 13.4 percent from the previous year, hurt by a yen that remained strong for much of that year, although it changed its exchange rate assumption to 85 yen to the dollar for the current quarter from a forecast of 78. "We've got big tests in the coming week, like Fanuc coming out with weak numbers, and I don't think the judgment is over on that yet. Four percent down is not a shock," said Stefan Worrall, director of equity cash sales at Credit Suisse. "It does matter if euphoria has got ahead of itself. A lot of these stocks have already ripped on a pretty bullish macro outlook," Worrall added. Advantest Corp shed 4.4 percent after the Nikkei business daily said the chipmaker's operating profit for the year ending March was expected to undershoot expectations as it likely suffered an operating loss of 2 billion yen ($22 million) in the last quarter due to slowing iPhone 5 sales. Hitachi High-Technologies Corp tumbled 11.3 percent after JPMorgan cut its rating to 'underweight' from 'overweight', reflecting the company's failure to meet guidance in the third quarter, with poor demand in its semiconductor business contributing to a 98.1 percent slide in its operating profit for the period. "So far we've seen no positive effect from a softer yen and several companies have cut full-year guidance. I see that pattern continuing," said Yoshihiko Tabei, chief analyst at Kazaka Securities. "But we can hope that the softer yen and a pick-up in China will allow companies to forecast a 20 to 30 percent increase in profits in the year starting from April." Tabei added that investors would shift from buying "anything and everything" to setting their sights on companies set to benefit from the government's 10.3 trillion yen ($113.21 billion) economic stimulus plan when the cash begins to circulate in the real economy. The broader Topix added 0.3 percent to 919.95 by the midday break.
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