Nikkei ends flat; earnings support but Toyota slips

By Aiko Hayashi

TOKYO (BestGrowthStock) – Japan’s Nikkei average finished flat on Monday as investors picked up shares of companies that reported bullish earnings such as Mizuho Financial Group (8411.T: ) but sold resource shares on weaker commodity prices.

Toyota Motor Corp (7203.T: ), which has fallen almost 14 percent in the past week on its recall woes, slipped 1.2 percent despite news that U.S. safety regulators are satisfied with its plan for fixing an accelerator pedal problem.

Eyes are on Toyota’s announcement of details of the plan at 6:30 a.m. Eastern time, followed by a conference call for media at 11 a.m. Eastern, then its third-quarter financial results on Thursday.

Honda Motor Co (7267.T: ) also slid after announcing a large global recall over a faulty window switch.

“A growing risk-averse mood is reflected in a weaker euro and lower oil prices, and investors are trying to figure out the direction for the stock market in that environment,” said Kazuhiro Takahashi, general manager at Daiwa Securities Capital Markets.

“Investors have priced in good earnings, and even if individual stocks are bought on positive earnings, they are not strong enough buoy the overall market.”

The benchmark Nikkei (.N225: ) nudged up 6.98 points to end at 10,205.02 after falling as low as 10,129.91, its lowest since December 18.

The broader Topix (.TOPX: ) fell 0.3 percent to 898.61.

Concerns about the fiscal health of some of the smaller euro zone countries including Greece and Portugal have pressured the euro, while a tightening policy in emerging countries such as India and China also weighed on investor sentiment, market players said.

India’s central bank surprised markets by raising banks’ cash reserve requirements by more than expected on Friday and warned of mounting inflation, setting the stage for a rise in interest rates in the coming months.

“Global exit strategies have started to appear from emerging countries and investors are watching how that affects international money flows,” said Fumiyuki Nakanishi, manager at SMBC Friend Securities.

Some 2.2 billion shares changed hands on the Tokyo exchange’s first section, steadily slowing after it marked its highest volume in seven months above 3 billion shares last month.

Declining stocks outnumbered advancing ones by more than 2 to 1.

AUTOS DOWN

Honda lost 2.5 percent to 2,999 yen and Toyota fell to 3,450 yen.

Market players said investors are worried the recalls could hurt Toyota’s brand image and its long-term business prospects, while some cited concerns about a possible cut in the automaker’s earnings outlooks.

“There’s definitely concern about longer-term damage to the image, as well as how far the damage might extend to parts makers and so on. This could also affect Toyota’s overall competitiveness,” said Hiroaki Osakabe, a fund manager at Chibagin Asset Management.

Commodity markets ended January with their worst losses in more than a year as a surge in the dollar and a weak demand outlook caused prices to stumble after a strong run in 2009.

Trading houses lost ground, with Mitsui & Co (8031.T: ) falling 2.9 percent to 1,293 yen and Mitsubishi Corp (8058.T: ) shedding 2.2 percent to 2,140 yen.

Oil and gas field developer Inpex Corp (1605.T: ) slipped 1.4 percent to 651,000 yen after oil prices fell on Monday to extend January’s loss, the worst in 13 months, on concerns about global growth and sluggish oil demand. (O/R: )

Shares of Toshiba Corp (6502.T: ), Japan’s biggest chipmaker, sank 6 percent to 467 yen after it kept its outlook far below market estimates and flagged belt-tightening measures after a stronger yen and sliding PC prices hurt quarterly profit.

But shares of companies expecting strong earnings found favor.

Mizuho gained 1.7 percent to 178 yen after Japan’s second-largest bank said it returned to profit in the October-December quarter, helped by a fall in bad loans and smaller losses on its stock portfolio.

The bank also stuck to an annual profit forecast that is above market consensus.

Fanuc Ltd (6954.T: ) extended gains, jumping 4.4 percent to 9,040 yen, after the industrial robot maker raised its sales forecast for the year to March during trading hours on Friday by 3.7 percent to 207.4 billion yen ($2.3 billion) thanks to an increase in orders.

Shares of Toto Ltd (5332.T: ), Japan’s No.1 toilet maker, shot up 7.1 percent to 590 yen after it lifted its annual operating profit forecast on Friday by 10 percent to 5.5 billion yen, helped by cost cuts.

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(Additional reporting by Elaine Lies; Editing by Michael Watson)

Nikkei ends flat; earnings support but Toyota slips