Nikkei at 1-week closing low as concerns over output grow

By Chikafumi Hodo and Antoni Slodkowski

TOKYO (Reuters) – Japan’s Nikkei stock average fell to a one-week closing low, losing ground for a second straight day on Wednesday as concerns grew about mounting production losses for quake-hit manufacturers.

The benchmark index has regained more than half the losses it posted since the March 11 devastating earthquake and tsunami but market players said the rebound driven mainly by foreign investors appeared to have run its course.

Although the dollar hit a six-month high of 85.52 yen in Asia trade, the impact of a weaker yen, normally supportive for Japanese exporters, was limited as worries over bottlenecks and disruptions to supply chains prevailed.

“The market is increasingly getting concerned that manufacturers may not be able to raise production to full capacity for a long time despite a series of announcements that they will resume operations,” said Toru Hashizume, chief investment officer at Stats Investment Management.

Analysts said the market has started pricing in disruptions in production for blue-chip exporters such as Sony Corp (6758.T: Quote, Profile, Research) and Toyota Motor Corp (7203.T: Quote, Profile, Research) ahead of earnings announcements for the business year that ended on March 31.

The benchmark Nikkei average (.N225: Quote, Profile, Research) finished the day down 0.3 percent or 31.18 points at 9,584.37, its the lowest close since March 29.

The broader Topix (.TOPX: Quote, Profile, Research) closed down 0.9 percent or 7.55 points at 839.61, its lowest close since March 18.

Although some said immediate support for the Nikkei lay around 9,500, others said it could break that level easily.

“The Nikkei is heading for a second dip after the quake, and will likely hit a double bottom between April and June as operating losses for that period, particularly among automakers and electronics firms, are going to be severe,” said Masayuki Kubota, a senior fund manager at Daiwa SB Investments Ltd.

“Japanese firms, unlike their European and U.S. peers, issue annual earnings forecasts, and with so many uncertainties they’ll either show very conservative estimates or none at all,” he said.

Among exporters, Sony lost 1.2 percent to 2,591 yen but Toyota managed to edge 0.2 percent higher to 3,265 yen.

After the close of trade Toyota said it would resume production at one more domestic plant and estimated that it has lost production of some 260,000 vehicles since the quake.

Sony also said after the close that it had resumed partial or full operations at five additional plants.

Shares in Tokyo Electric Power Co (9501.T: Quote, Profile, Research) plunged more than 16 percent, at one point hitting an all-time low of 292 yen on concerns the utility will face huge damages payments due to the ongoing crisis at its stricken nuclear power plant.

Analysts said that with options prices settling this Friday — the first time since the quake — Tokyo stocks will likely come under more selling pressure in the near term as difficulties in forecasting prospects for the economy were increasingly sending investors to the sidelines.

“Investors have pulled out from Japanese stocks as they can’t tell what will happen in the future. I’m especially concerned about the way retail investors have pulled out from the market in recent weeks,” said a senior trader at a foreign brokerage house.

Oil-related shares such as Japan’s largest oil and gas developer, Inpex Corp (1605.T: Quote, Profile, Research), and trading houses such as Mitsui Co (8031.T: Quote, Profile, Research) succumbed to profit-taking after oil prices rose on Tuesday to their highest since 2008 on supply concerns.(O/R: Quote, Profile, Research)

Inpex fell 1.2 percent to 635,000 yen after having advanced more than 15 percent in March, while Mitsui Co was 1.3 percent lower at 1,479 yen.

Shares of Oriental Land Co (4661.T: Quote, Profile, Research), the operator of the Tokyo Disney Resort, fell 0.9 percent to 6,330 yen after the Asahi newspaper reported there is a strong possibility the reopening of the theme park complex will be delayed until at least May.

The company said no decision has been made regarding the reopening of the park. ($1 = 84.900 Japanese Yen)

(Editing by Edwina Gibbs)

Nikkei at 1-week closing low as concerns over output grow