Japanese stocks fell by late afternoon on Friday amid jitters over the prospect of higher U.S. interest rates, but the downside was limited as some investors scooped up bargains from four days of losses. Selling hit retailers, insurers and non-bank financial firms that have enjoyed hefty gains in the past few months on the back of growing optimism about a recovery in Japan's economy. But selected stocks with good earnings prospects such as Teijin Ltd <3401.T> drew buying. Analysts said investors were reluctant to build fresh positions before seeing a key U.S. monthly employment report, due later on Friday, as it was expected to provide more clues on the timing of a rate rise in the United States. "What we want to see is how much, what percentage, and when they (the Federal Reserve) will raise rates...and the jobs data is expected to give us a hint," said Kenichi Azuma, equity strategist at Cosmo Securities.
"Also, we are seeing a change in the trend of foreigners' buying of Japanese stocks, especially among hedge funds, and the market is really concerned about that because foreigners have been the main engine behind the market's latest rally." News of the resignation of government spokesman Yasuo Fukuda, a powerful member of Prime Minister Junichiro Koizumi's cabinet, had little impact on the stock market, where government policy has not been the main focus of late. The Nikkei average <.N225> fell 0.51 percent to 11,511.84 by 0525 GMT after earlier falling as low as 11,450.62, the lowest intraday level since March 25.
The Nikkei has steadily lost ground since hitting a 33-month closing high of 12,163.89 on April 26. The Tokyo market was closed on April 29 and for the first three days of this week due to public holidays. The broader TOPIX index <.TOPX> was down 0.63 percent at 1,157.93. Textile maker Teijin climbed 4.2 percent to 347 yen after the company said on Thursday it returned to the black in the past year thanks to growth in its polyester fibre and film businesses, and forecast a doubling in group net profit to 17 billion yen ($154.9 million) in the year to next March. Fujitsu Ltd <6702.T> bounced back from Thursday's broad-based selloff, rising 5.41 percent to 779 yen. Cell phone giant NTT DoCoMo Inc <9437.T> was up 0.46 percent at 218,000 yen ahead of its fiscal 2003/04 earnings results due after the bell. Among notable decliners, Japan's largest shopping mall operator Ito-Yokado Co Ltd <8264.T> lost 0.88 percent to 4,530 yen, extending losses into a fifth straight session. Mitsubishi Motors Corp <7211.T> sank 3.86 percent to 249 yen after seven former company executives were arrested on Thursday on suspicion of professional negligence and falsifying reports about a faulty truck hub blamed for one death and dozens of accidents.
Mitsubishi Fuso Truck & Bus Corp, an unlisted truck maker owned 65 percent by DaimlerChrysler AG and 20 percent by Mitsubishi Motors, admitted in March that a design defect had been responsible for more than 50 truck accidents since 1992 and recalled 112,000 trucks in Japan. Until then, it had blamed improper maintenance by users for the wheel hub problems.///www..com