Nikkei slips 1.5 percent, yen and profit-taking weigh

By Elaine Lies

TOKYO (BestGrowthStock) – Japan’s Nikkei average lost 1.5 percent on Friday, putting in its lowest close in nearly three weeks, with sentiment hit after Google’s (GOOG.O: ) results did not live up to high expectations and as a stronger yen set off profit-taking.

Google posted a 23 percent jump in quarterly revenue on a rebound in Web advertising, but its stock dropped in after-hours trade. U.S. stocks (Read more about the stock market today. ) futures were down about 0.5 percent in Asian trade.

Banking shares also fell. The Nikkei newspaper reported Japan’s top banking groups, including Mitsubishi UFJ Financial Group Inc (8306.T: ), are expected to swing to an annual profit, as bad-debt disposal costs declined, but the numbers cited were roughly in line with expectations.

“There have been really high expectations for corporate results and so this increases the chances for disappointment,” said Hiroaki Osakabe, a fund manager at Chibagin Asset Management.

“But we’re not in a situation where the market will be heavily sold off as a result, since the global economy isn’t worsening at this point.”

The benchmark Nikkei (.N225: ) shed 171.61 points to 11,102.18, its lowest close since March 31. It fell 0.9 percent this week for its second consecutive week of losses after hitting an 18-month high on April 5.

Support for the Nikkei is seen at 11,000, roughly where its 25-day moving average comes in. Should this break, the next levels are at 10,800, around which the Nikkei traded for about a week in March, and then its 75-day moving average near 10,600, Osakabe said.

The broader Topix (.TOPX: ) fell 1 percent to 988.84.

The dollar lost 0.4 percent to 96.64 yen, which encouraged profit-taking. A strong yen eats into exporter profits when repatriated.

The yen surged as caution about a possible revaluation by China led yen sellers to close short positions ahead of the weekend, with the market on watch for signs out of China on whether it will allow more yuan appreciation or tighten monetary policy.

BANKS BRUISED

Banking shares slipped, though they outperformed the wider market.

The Nikkei business daily said Mitsubishi UFJ and Sumitomo Mitsui Financial Group (8316.T: ) are expected to each report net profits of around 300 billion yen ($3.2 billion), while Mizuho Financial Group Inc (8411.T: ) is believed to have earned around 200 billion yen.

“Expectations for solid earnings appear to have run their course as you can see in today’s banking shares. The focus is now shifting to this financial year to March rather than immediate numbers,” said Hiroaki Kuramochi, chief equity marketing officer at Tokai Tokyo Securities.

Mitsubishi UFJ, Japan’s top bank, fell 0.6 percent to 514 yen and Sumitomo Mitsui shed 1.2 percent to 3,290 yen. Mizuho lost 0.5 percent to 189 yen.

Tokyo Electron (8035.T: ) fell 2.7 percent to 6,380 yen, after hitting its highest since June 2008 earlier this week, hurt by a report that it will likely post an operating profit of about $645 million this year, less than what analysts have been expecting.

Truck maker Hino Motors (7205.T: ) was one of a handful of shares to buck the trend, rising 3.7 percent to 422 yen to become top Nikkei 225 percentage gainer. It revised its annual operating income estimate to a profit of 1 billion yen from a loss of 9 billion yen, citing increased sales in Asia.

Nippon Sheet Glass Co (5202.T: ) gained 1.8 percent to 287 yen after the company named former DuPont (DD.N: ) executive Craig Naylor as its new CEO, making him the second non-Japanese to head the Tokyo-based glass maker.

Some 2.2 billion shares were traded on the Tokyo exchange’s first section, keeping near a one-month high hit last Wednesday. Declining stocks outnumbered advancing ones by about 4 to 1.

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(Additional reporting by Aiko Hayashi; Editing by Edwina Gibbs)

Nikkei slips 1.5 percent, yen and profit-taking weigh