Tokyo's Nikkei average eased by mid-afternoon on Wednesday as U.S. chip giant Intel Corp's disappointing revenue outlook hit local chip stocks, although losses were limited as steel makers and banks extended gains. Analysts said buyers were still hungry for Japanese stocks, but volatility in the currency market and the U.S. corporate earnings season were curbing buying of heavily weighted technology stocks. "Buyers are staying away from techs after seeing Intel's outlook, and before seeing Advanced Micro Devices' results which are due out later in the day," said Kenichi Azuma, an equity strategist at Cosmo Securities. "So hungry investors are again buying domestic stocks, although the recent hefty buying of several stocks, like banks, seems overdone." The Nikkei average <.N225> shed 0.39 percent to 12,090.96 by 0429 GMT, after ending Tuesday at its highest level since August 8, 2001.
The broader TOPIX index <.TOPX> was up 0.02 percent at 1,216.82, building on Tuesday's 32-month high. Advantest Corp <6857.T>, Japan's leading maker of semiconductor testing devices, fell 1.84 percent to 9,070 yen. Tokyo Electron Ltd <8035.T>, Japan's biggest maker of chip-making equipment, fell 1.92 percent to 7,160 yen after Intel Corp posted higher quarterly profit but issued second-quarter revenue forecasts a little below expectations. The news, which came after the U.S. market closed, sent Intel's shares lower in after-hours trade. Analysts said the market's focus is now on quarterly business results from computer chip maker Advanced Micro Devices Inc , due out on Wednesday. Bucking the market's losses, steel makers found a solid lift as domestic institutional investors and individuals stepped up buying. Cosmo's Azuma said, however, that such investors are just following foreign investors' moves and some companies' business and earnings outlooks do not justify the recent sharp rises in their share prices. Steel giant Nippon Steel Corp <5401.T> climbed 3.17 percent to a four-year intraday high of 260 yen. Its rival JFE Holdings <5411.T> was up 2.01 percent at 2,795 yen, boosting the steel sector subindex <.ISTEL.T> by 3.26 percent and making it the best performer among the market's 33 industries. Among other notable gainers, Mizuho Financial Group <8411.T>, Japan's largest banking group, gained 3.56 percent to 553,000 yen, extending gains into a third straight day. Smaller rival UFJ Holdings Inc <8307.T> was up 0.89 percent at 790,000, the highest intraday level since May 2001.///