TOKYO, Oct 22 - Japan's Nikkei average fell on Wednesday, staying below the 11,000 level as investors, wary of recent overheating, continued to sell banks like Mizuho <8411.T> and other domestic-oriented stocks. Investors, who had bought non-exporters on optimism about Japan's economic recovery, also sold trading houses such as Sumitomo Corp <8053.T> and Nissho Iwai-Nichimen Holdings Corp <2768.T>. Katsuhiko Kodama, head of the equities section at Toyo Securities Co Ltd, said the Nikkei will likely fall further, possibly as low as 10,600 yen. "The market will remain in a correction phase at least until next week, and then investors will start buying shares based on earnings results," he said. Kodama also said some dealers and institutional investors were shying away from the market because of growing speculative moves in some shares. "There is too much speculative trade going on in the market. It's one big money game, influenced by active trades through the Internet," he added. As of 0528 GMT, the Nikkei <.N225> was down 0.79 percent at 10,944.32, tacking on to a 1.17 percent fall on Tuesday. The broad-based TOPIX index <.TOPX> fell 1.21 percent to 1,080.05.
The Nikkei reached a 16-month intraday high of 11,238.63 on Tuesday morning, but pulled back as investors worried about its rapid nine percent rise since the start of October. The TOPIX was also dragged down mainly by selling in banks such as Mizuho Financial Group Inc, the world's largest bank by assets, which dropped 6.0 percent at 282,000 yen, and UFJ Holdings Inc <8307.T>, which also slipped 6.62 percent to 494,000 yen. Trading companies, once seen as a symbol of Japan's economic might and known for handling everything from satellites to frozen shrimp, were battered with Sumitomo Corp dropping 5.49 percent to 758 yen and Nissho Iwai-Nichimen sagging 4.41 percent to 693 yen. In tech shares, Softbank Corp <9984.T> took a rollercoaster ride, falling three percent after rising 6.7 percent in the morning. By mid-afternoon, Softbank was slightly down 0.63 percent at 6,360 yen. Yahoo Japan Corp <4689.Q>, owned 42 percent by Softbank, also erased some of its earlier gains. Yahoo Japan was up 2.87 percent at 1.79 million yen, after rising as high as 1.91 million yen in the morning. A few bright spots included heavy machinery makers, with Meidensha Corp <6508.T> surging 13.27 percent to 256 yen and Daihen Corp <6622.T> jumping 11.64 percent to 163 yen.
Meidensha, a maker of heavy electric machinery, rose after UFJ Tsubasa Securities rated the stock "A+", indicating its view that Meidensha shares will likely outperform the broader TOPIX <.TOPX> by more than 20 percent in six to 12 months. UFJ Tsubasa said Meidensha's environmentally friendly products, such as wind turbine generator systems and ozone generating devices, should help the company boost sales.//