Japanese stocks weakened by mid-afternoon on Thursday as further losses on Wall Street and a rise in the yen dampened auto shares such as Honda Motor Co <7267.T> and other exporters. Honda, Japan's second-biggest auto maker, fell more than three percent to 4,800 yen and bigger rival Toyota Motor Corp <7203.T> eased 0.52 percent to 3,860 yen. But gains in bank shares and steel and several other material makers reflected a continued appetite among investors for bargains, limiting the market's downside.
The benchmark Nikkei average <.N225> was down 1.02 percent at 11,317.00 as of 0515 GMT, extending Wednesday's 0.86 percent fall. It was 2.8 percent below a 21-month intraday high of 11,643.37 marked on Monday. The TOPIX <.TOPX> index of all first-section shares declined 0.61 percent to 1,121.49. "Institutional investors both at home and from abroad are looking for issues other than tech shares now that they are already overweight in them," said Takahiko Murai, general manager of equities at Nozomi Securities. "Their favourites are retailers, banks and steel makers, which will all benefit from what looks like a nearing end to deflationary pressure on prices." Sumitomo Metal Industries <5405.T> rose 2.5 percent to 123 yen and was the most active issue by volume on the Tokyo bourse's first section. It earlier rose as high as 125 yen, its best level since September 1999, on views that Japan's third-biggest steel maker by crude output is among firms benefiting from a recovery in Japan's economy. Traders said a rise in trading volume recently also helped lure short-term dealers and foreign investors. UFJ Holdings <8307.T>, Japan's fourth-biggest banking group, was up 2.77 percent at 593,000 yen and No.1 banking group Mizuho Financial Group <8411.T> extended gains into an 11th session, rising 0.51 percent to 395,000.
But office machine maker Canon Inc <7751.T>, three-fourths of whose revenues come from outside Japan, lost 3.49 percent to 5,260 yen after the U.S. tech-heavy Nasdaq Composite Index <.IXIC> lost 1.55 percent on Wednesday, falling for the fourth straight session. Joining Canon, consumer electronics giant Sony Corp <6758.T> fell 1.34 percent to 4,430 and Fujitsu Ltd <6702.T> lost 1.75 percent to 618 yen. A halt in the yen's fall also fuelled selling of exporters. The dollar was around 111.40 yen in Tokyo afternoon trade and the euro fell more than one yen on the day to 134.56 yen . Given Canon's assumption of a euro/yen rate of 130 yen this calendar year and a dollar/yen rate of 105 yen, for example, further appreciation in the yen was feared to eat into its profits from abroad.///