22 August 2003, 10:30  Japan's Nikkei falls, yen rise hits high-techs

TOKYO, Aug 22 - Japan's Nikkei average was on the defensive in late trading on Friday, threatening to end lower for the first time in five days after a rise in the yen sparked profit-taking in Toyota and other auto and high-tech shares. But the yen's climb against major currencies did not significantly bruise market sentiment and investors were still looking to buy domestic-oriented sectors and retailers such as Ito-Yokado Co Ltd <8264.T>. As of 0526 GMT, the Nikkei average <.N225> was down 0.19 percent or 19.93 points at 10,342.76 after closing on Thursday at a 2003 high, having gained five percent during the week. The TOPIX index <.TOPX> was up 0.13 percent to 1,010.88.
"The dollar's fall into the 117 yen zone is a bit worrying, but most investors are still convinced sentiment is strong enough to push the Nikkei to at least 10,500 in the near term," said Terushi Hirotama, head of trading at Ichiyoshi Securities. "Money is flowing into sectors that concentrate on the domestic economy where currency movements are of little concern." Investors took profits on tech and auto exporters after the euro dropped to a four-month low against the yen and the dollar fell to a one-month low of 117.60 yen in New York. A higher yen eats into Japanese exporters' overseas profits when repatriated. The dollar was fetching about 117.80 yen in Asian trade. "Short-term players saw the yen's tick-up and decided it was time to take profits. Besides the market has been on fire recently," said Hiroaki Kuramochi, head of global equities at Credit Lyonnais.
Chip maker NEC Electronics Corp <6723.T> dropped 6.68 percent to 6,990 yen after ending the previous session up about 40 percent since its market debut in July. Toyota Motor Corp <7203.T>, Japan's top auto maker, fell 2.64 percent to 3,320. But traders said more domestic-oriented sectors were snapped up on optimism over the prospect of economic recovery in Japan, an idea that gained fresh support on Friday with news that the all-industries activity index rose more than expected in June. Ito-Yokado, Japan's top retailer, powered up 7.17 percent to 3,440 yen, while ninth-largest life insurer Taiyo Life Insurance Co <8796.T> shot up 17.39 percent to 135,000 and advertising giant Dentsu Inc <4324.T> jumped 9.43 percent to 522,000 yen.//

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