TOKYO, Sept 29 - Japanese stocks clawed back a bit from nearly six-week lows in Monday afternoon trade, but stayed soft as investers sold Sony and other exporters on weakness on Wall Street and concerns about the persistently strong yen. Forecast revisions by Sumitomo Chemical Co <4005.T> and others also put pressure on basic materials makers, but the market was partially supported by positive news about big banks and guarded optimism ahead of a slew of economic data this week. The Nikkei average <.N225> at 0500 GMT was down 0.85 percent at 10,231.11, after earlier falling as far as 10,166.21, its lowest intraday level since August 20. The broader TOPIX index <.TOPX> was down 0.46 percent to 1,016.36.
"Weakness in New York and the (strong) yen are still the biggest factors keeping the market down," said Hiroaki Kuramochi, head of global equities at Credit Lyonnais. "When there is weakness in techs that have a big weighting in the Nikkei and money is flowing instead to defensives, it's going to be difficult to push the average up very much." Sony Corp <6758.T>, the world's largest consumer electronics maker, which gets about two-thirds of its sales overseas, fell 2.75 percent to 3,890 yen as the yen firmed to around 111.2 per dollar , not far off last week's three-year high of 110.91. Chips and computers conglomerate Fujitsu Ltd <6702.T> dropped 3.03 percent to 576 yen, while Honda Motor Co <7267.T>, Japan's second-biggest auto maker, lost 4.27 percent to 4,480 yen. Led by falls in auto and electronics firms, the Nikkei has given up about nine percent since marking a 15-month intraday high of 11,160.19 on September 19 as concerns that the firming yen would eat into the profits of exporters dictated trade.
The continued strength of the yen also dulled some of the lustre of encouraging Friday forecast revisions from Japan's top maker of chip testing equipment, Advantest Corp <6857.T>, and ink-jet printer maker Seiko Epson Corp <6724.T>. Seiko Epson was only up 0.57 percent at 3,520 yen in the afternoon, while Advantest firmed 1.63 percent to 7,500 yen. Some investors said that Advantest's upward revision had already largely been factored in, while its valuations still looked pricey after a rally in which its shares have more than doubled from April lows. Other Friday revisions were not as upbeat, and gave investors something else to worry about besides the strengthening yen. Sumitomo Chemical's downward revision for the year to March, citing high input prices and a slow recovery in the market for synthetic fibre materials, had investors selling basic materials makers whose earnings were expected to be strong due in part to growing Asian demand. "In contrast to recent hopes for upbeat results from chemical and materials makers, Sumitomo Chemical revised down its forecast. That's disappointing," said Yusuke Sakai, manager of equities at Mizuho Securities. "Now that we've realised we should look at the conditions of individual companies, a sector-wide rally like those we often saw in the past is unlikely to occur."
Sumitomo Chemical slid 5.78 percent to 391 yen, and was also hurt after Deutsche Securities cut its rating on the firm to "hold" from "buy". Mitsubishi Materials Corp <5711.T>, Japan's top nonferrous metals maker, was also hit after a Friday forecast cut, diving 6.36 percent to 162 yen and helping send its sector sub-index <.INFRO.T> down 2.28 percent. Bank shares, however, rose after the Nihon Keizai Shimbun daily said Bank of Tokyo-Mitsubishi was on course to roughly halve the ratio of its nonperforming loans to overall lending by the end of September, a year and a half ahead of target. Bank of Tokyo-Mitsubishi is the core unit of Japan's third-largest banking group, Mitsubishi Tokyo Financial Group Inc (MTFG) <8306.T>. MTFG gained 4.66 percent to 696,000 yen, while Mizuho Financial Group <8411.T> rose 3.08 percent to 234,000 yen. Some traders also said the Nikkei would show resilience above 10,000 since this week's economic data, including the Bank of Japan's "tankan" corporate survey, were likely to indicate a sustainable economic recovery was on the way.//