Tokyo stocks edged lower by late afternoon on Monday as telecom giant Nippon Telegraph and Telephone Corp. (NTT) tumbled on the likely advent of fierce rivalry in its fixed line business, but confidence about Japan's economic recovery limited losses. The Nikkei average <.N225> lost 0.41 percent to 11,164.09 by 0517 GMT, retreating from Friday's three-week closing high. The broader TOPIX index <.TOPX> dipped 0.09 percent to 1,136.70. NTT <9432.T>, the nations's top telecoms company, fell 5.51 percent to 480,000 yen, hit by rating downgrades by three brokerages as rival Softbank Corp <9984.T> was poised to announce the launch of a cut-rate, fixed-line phone service.
Some investors, however, saw the slide as temporary. "Softbank tends to make grand plans but it's debatable as to whether this will turn into a positive development for the company in the near future," said Kazunori Ohtomo, senior fund manager at STB Asset Management. Losses in the telecoms sector were compounded by growing investor disenchantment with No. 2 telecoms firm KDDI Corp. <9433.T>, as it faces stiffer competition from the nation's top mobile phone operator NTT DoCoMo Inc <9437.T>. That helped prompt a rating downgrade by Credit Suisse First Boston and the shares slumped 2.67 percent to 546,000 yen. But data underlining a solid economic recovery lent support to the market. Japanese retail sales figures issued before the opening bell showed a rise of 0.8 percent in July from a year earlier, beating economists' median forecast of a 0.5 percent rise. Analysts said optimism was high that Tuesday's release of Japanese industrial production data for July would also show a solid rise, following a bigger-than-expected fall in June. Still, investors were reluctant to build positions ahead of the Republican convention, which begins in New York later in the day to launch President George W. Bush's re-election bid, with some analysts voicing security concerns.///