TOKYO, Oct 9 - Japan's Nikkei average was largely flat in Thursday afternoon trade, losing steam as the dollar hit new three-year lows against the yen, rekinding concerns it could put a dent in exporters' profits. Select exporters sought in the morning because of their relatively strong prospects came under pressure in the afternoon with Canon Inc <7751.T> and Toyota Motor Corp <7203.T> giving up earlier gains. "The yen rapidly appreciated to 110 yen from 115 yen and the market now thinks the currency could further strengthen to 105 yen from 110 at the same speed," said Masayoshi Okamoto, head of dealing at Jujiya Securities. At 0523 GMT, the Nikkei average <.N225> was up 0.36 percent at 10,580.34, after rising as high as 10,581.80 in the morning. The broader TOPIX index <.TOPX> managed to hold onto gains, edging up 0.57 percent at 1060.80.
The yen's sudden moves put a brake on rises in auto makers just as investors returned to exporters with solid earnings outlooks. Number three Nissan Motor Co <7201.T> was unchanged at 1,206 yen, after rising as much as nearly two percent in the morning. Toyota, Japan's largest auto maker, also lost steam to erase earlier gains, inching up 0.3 percent to 3,350 yen. Several other exporters remained weak, with Matsushita Electric Industrial Co <6752.T>, the world's second-largest consumer electronics maker, down 2.14 percent at 1,372 yen. One of the few bright spots was the retail sector as Seven-Eleven Japan Co <8183.T> and its parent Ito-Yokado Co Ltd <8264.T> reported strong half-year earnings. Ito-Yokado, Asia's biggest retail group, rose 4.03 percent to 4,130 yen after posting a group net profit of 23.24 billion yen ($212.2 million) for the half-year to August, better than its August downward revision of a 13 billion yen profit. Seven-Eleven Japan, which rose 3.84 percent to 3,790 yen, earned 49.99 billion yen in group net profit for March-August, beating the company's March forecast of 47.2 billion yen. Domestic-oriented issues have drawn buyers as they are relatively shielded from the volatile currency movements, but Okamoto said investors have become careful as to which shares to buy.
"Investors have become choosy," he said. "The market may be affected by announcements such as analysts' rating reports." Some Internet shares also lured buyers as Web access provider Softbank and other firms whose earnings are less vulnerable to, and may even benefit from, the firmer yen continued to see funds flowing their way. Venture capital firm Softbank Investment Corp (SBI) <8473.T>, which doubled its annual group net profit estimate on Wednesday on a rise in revenue at its unit E*Trade Securities, and several other firms were also boosted by earnings revisions. Shares in SBI jumped 14.81 percent to 217,000 yen, while its parent Softbank Corp <9984.T> firmed 3.56 percent to 5,240 yen. Zenshiro Mizuno, senior managing director at Marusan Securities Co Ltd, said the market has not yet lost momentum, with the turnover remaining at a relatively high level of around 863 billion yen as of mid-afternoon trade.//