Tokyo's Nikkei average fell 0.14 percent by mid-afternoon on Tuesday as selling hit recent gainers such as Mitsui O.S.K. Lines Ltd. <9104.T>, overshadowing a retreat in oil prices that helped lift some exporters. Investors, however, remained skeptical that the worst was over for crude prices even as oil backtracked from record highs near $50 a barrel last week, analysts said. That uncertainty would likely keep the market moving in a narrow range. Nagging concerns about the outlook for the global economy and for domestic corporate earnings, especially in the technology sector, in the latter half of this year also made players reluctant to place buy orders, they said. "Domestic institutional players have mostly taken to the sidelines and foreigners' interest in Japanese stocks has also waned in recent sessions because nobody is confident enough to bid stocks up from the current level," said Yasuo Ueki, a market analyst at consultancy Poko Financial Office.
"Buyers might return to the market if oil prices keep falling ... but otherwise, the market is likely to continue moving in a narrow range until mid-September when players shift their focus to corporate interim earnings." The Nikkei <.N225> fell 15.22 points to 10,945.75 by 0504 GMT, paring the previous day's 71-point gain. It earlier rose as high as 11,016.12, topping the psychologically important 11,000 level for the second day in a row, although it failed to keep above that level as investors moved to grab profits. The broader TOPIX index <.TOPX> slipped 0.03 percent or 0.35 point to 1,113.89. Mitsui O.S.K. <9104.T>, Japan's second biggest shipping firm, fell 0.79 percent to 630 yen. Shares hit a 13-year closing high on Monday after UBS raised its share price target and annual earnings forecast, saying the company's own forecast for container vessel and tanker operations was too conservative. Profit-taking also hit other shippers, which had enjoyed solid gains in recent sessions on expectations for steady growth in the shipping business due to strong domestic demand. Nippon Oil Corp. <5001.T>, Japan's biggest oil distributor, lost 2.22 percent to 662 yen. The stock last week hit a three-year high of 722 yen on hopes that higher oil prices might help the company increase its sales. Crude for October delivery was trading at around $45.91 a barrel in Asia after ending down 67 cents at $46.05 in New York on Monday, as Iraq reopened two pipelines and increased its oil exports. Exporters got a lift as the fall in oil prices eased investor fears about a slowdown in the global economy. Japan's biggest auto maker, Toyota Motor Corp. <7203.T>, rose 1.69 percent to 4,210 yen after a newspaper report that it would invest 50 billion yen ($457.6 million) by 2006 to increase its domestic production capacity by 10 percent to meet overseas demand. Smaller rival Nissan Motor Co. Ltd. <7201.T> was up 0.96 percent at 1,160 yen.///