TOKYO - Japanese stocks inched higher by midsession on Monday, led by Sharp Corp and other blue-chip issues after advances by U.S.-led forces in Iraq lifted Nasdaq futures and boosted the dollar to a two-week high. But the market's ascent was dulled by diving shares of Fuji Photo Film Co Ltd, Nippon Unipac Holding, Mitsui Fudosan Co and other firms that had slashed their earnings forecasts on Friday for the year ended March 31. The benchmark Nikkei average was up 0.19 percent or 15.74 points at 8,089.86, off a morning high of 8,144.55 but extending the previous session's 0.70 percent climb. The broader TOPIX index put on 0.39 percent to 798.67.
"Nasdaq futures are indeed higher but investors are still wary of buying before seeing how Wall Street reacts to recent war developments when it opens later today," said Hideki Kamiya, senior fund manager at Resona Asset Management. "And there is no need to rush and buy now, given that we are in the earnings revision season and it appears that more firms will have to revise down." Liquid crystal display maker Sharp was up 2.69 percent at 1,260 yen after the dollar rose to a two-week high of 120.8 yen and June Nasdaq futures rose 1.5 percent on news that U.S. troops had seized all but one of the main roads into Baghdad. Among other major exporters to gain ground on speculation that the war in Iraq will end quickly, top tire maker Bridgestone Corp climbed 2.68 percent to 1,492 yen and Honda Motor Co Ltd firmed 1.75 percent to 4,080 yen. Still, some analysts warned that an end to the conflict would not entirely clear up concerns over the U.S. economy. Indeed, recent data suggests the war is already taking its toll on consumer sentiment and corporate activity in the United States. "The market is already looking beyond the war to the global economy and it is very concerned with what it sees," said Hiroyuki Nakai, chief strategist at Tokai Tokyo Securities. "For the time being, I expect the Nikkei to trade in a tight range between 7,800 and 8,200," he said.
BANKS TO DIVERGE?
Traders said that recent volatility in the banking sector and worries over the rising toll of the mysterious Severe Acute Respiratory Syndrome (SARS) were also weighing the market down. Mizuho Financial Group was down 0.81 percent at 73,800 yen, poised to extend last week's 25 percent slide when corporations, investors that purchased preferred stock recently issued by banks, and speculators were all dumping bank shares. Other megabanks rose, however, with Sumitomo Mitsui Financial Group up 1.11 percent at 182,000 yen and Mitsubishi Tokyo Financial Group rising 2.38 percent to 430,000 yen after hitting a record intraday low of 402,000 in Friday trade. "We could see a divergence in bank stocks this week. For example, we might see Mizuho go down and Mitsubishi Tokyo rise," said Masayoshi Okamoto, head of dealing at Jujiya Securities.
Fuji Photo Film slid 4.71 percent to 3,440 yen after the photo film giant on Friday trimmed its revenue and operating profit estimates for 2002/03, citing weakness in its office equipment division and higher pension-related costs. Volume picked up, with 436.33 million shares trading hands on the first section, compared with 396 million shares on Friday and last week's morning average of 403 million shares. Gainers outnumbered decliners 686 to 608.///