Japanese stocks were mostly flat by late afternoon on Thursday, as the yen's advance against the dollar hit exporters, eclipsing gains in insurers after a key Bank of Japan report showed improvement in the nation's business confidence. Analysts said the strong results in the "tankan" survey, released before the open, had already been factored in, and investors were now worried about the yen's strength and its impact on corporate earnings in fiscal 2004/05 started Thursday.
"It seems like the yen's sharp rise is sending a chill through the market and foreigners, especially European funds, have started taking to the sidelines," said Yasuo Yabe, an adviser at Meiwa Securities. Honda Motor Co Ltd <7267.T>, which generates more than three quarters of its sales abroad, shed 2.08 percent to 4,700 yen on concerns the stronger yen might trim the firm's overseas sales. Video game maker Nintendo Co Ltd's <7974.T> announcement that it would revise its earnings forecast for the last business year only heightened investors' fears about the yen's impact. The Nihon Keizai daily said during the afternoon that Nintendo would book a one-off foreign exchange loss of about 68 billion yen ($652 million) for the past business year ended March 31. Nintendo declined to comment on the report. It plans to hold a news conference on its earnings forecast at 3 p.m. (0600 GMT).
Nintendo's shares sank 4.85 percent to 10,000 yen. The Nikkei average <.N225> was up 0.12 percent at 11,729.40 as of 0530 GMT. The broader TOPIX index <.TOPX> dipped 0.02 percent to 1,179.01. Both indices opened with gains after the closely watched tankan survey showed more Japanese firms felt they were doing better in March that at any time in nearly seven years. But the outcome put more downward pressure on the dollar, as it slipped to a low of 103.85 yen after the survey was released before regaining some ground to trade at 104.10 yen by late afternoon in Tokyo. The dollar hit a four-year low of 103.40 on Wednesday. Insurers were bought, with No.1 non-life insurer Millea Holdings <8766.T> rising 3.7 percent to 1.68 million yen. Banks also gained ground, cheered by the strong tankan. Shares of Mizuho Financial Group <8411.T>, Japan's biggest banking group by assets, rose 2.23 percent to 458,000 yen.///