TOKYO, Nov 18 - Japan's Nikkei average reversed earlier losses by mid-afternoon on Tuesday as investors bought back bank shares like UFJ on bargain-hunting, but traders said more loss-cut selling was likely to push the market down again. Also lending support was buying in large-cap shares such as Advantest Corp <6857.T>, Japan's top maker of chip-testing equipment, which rose 3.72 percent to 7,800, and peer Tokyo Electron Ltd <8035.T>, which tacked on 2.62 percent to 7,440 yen. Selling was mainly triggered by individual investors rushing to cut losses from margin trading, said Takahiko Murai, general manager of equities at Nozomi Securities. "There might be more selling from individual investors," he said. "I expect the Nikkei to fall further this week." By 0444 GMT, the Nikkei <.N225> was up 0.41 percent at 9,826.78 after falling as low as 9,678.78 in the morning. The benchmark sank 3.74 percent on Monday, its biggest one-day drop in a month and marking its first close below 10,000 since August.
The broader TOPIX index <.TOPX> was down 0.45 percent at 967.55. Monday's dive prompted some government officials to voice concern about the potential impact of the recent stock market drop on the Japanese economy. Trade Minister Shoichi Nakagawa said on Tuesday morning that the recent decline in Tokyo shares would have a negative impact on the Japanese economy. Likewise, Economics and Financial Services Minister Heizo Takenaka said the government was watching the stock market carefully and described this week's drop as a reflection of short-term supply and demand. While some investors ditched issues across the board, others snapped up some technology and bank shares. Megabank UFJ Holdings <8307.T> was up 3.81 percent at 381,000 yen after tumbling 9.4 percent on Monday, while Mizuho Financial <8411.T> rose 2.34 percent to 219,000 yen, partially recovering from a 10.8 percent fall the previous day. Other bright spots included drug makers Yamanouchi Pharmaceutical Co <4503.T> and Fujisawa Pharmaceutical Co <4511.T>. Fujisawa said on Tuesday that it was talking to various companies, including Yamanouchi, on possible tie-ups. That followed a report in the Nihon Keizai daily that Fujisawa and Yamanouchi were in talks to combine their business operations by early 2005, which led the Tokyo bourse to suspend trading in the two firms during the morning session. Fujisawa, Japan's fifth-biggest drug maker, rose 5.2 percent to 2,125 yen and third-ranked Yamanouchi gained 4.18 percent to 2,990 after trading in their shares resumed in the afternoon.//