TOKYO - Japan's Nikkei share average slipped 0.58 percent on Monday morning after a weak U.S. jobs report kept the dollar near a five-year low against the yen, hurting the shares of Japanese exporters.
Among the losers were Japan's biggest car maker, Toyota Motor Corp., and consumer electronics giant Sony Corp., which both depend on the United States for close to a third of their sales.
"There's still no relief from the strong yen and that's reflected in the shares of auto makers like Toyota today," said Koichi Seki, equity manager at Chuo Securities' sales department.
Seki said the strong yen was prompting some investors to seek refuge in sectors that depend more on the domestic economy, such as banks, one the best performing sectors in the morning.
Some tech issues were still getting support from last week's bullish report from Intel Corp., which raised its quarterly revenue target, citing strong global demand for microprocessors.
At midday, the Nikkei was down 63.87 points at 11,011.02 after rising 2.26 percent last week to 11,074.89, its biggest weekly gain since the first week of November.
The broader TOPIX index was down 0.43 percent at 1,105.71.
Toyota fell 1.54 percent to 3,840 yen, while Sony edged down 0.26 percent to 3,780.
Trading edged higher, with 703.26 million shares changing hands on the first section, the highest morning total since Nov. 15. Decliners outnumbered gainers 707 to 689.
INTEL BOOST
One of a handful of tech issues continuing to gain on Intel's bullish announcement last Thursday was Tokyo Electron Ltd., Japan's biggest maker of chip-testing devices.
Its shares gained 2.36 percent to 6,080 yen, after briefly touching a five-month high at 6,090 yen.
Another notable winner was electronics conglomerate Fujitsu Ltd., which rose 1.85 percent to 662 yen after it said it and Internet routing firm Cisco Systems would hold a briefing on Monday on a strategic alliance.
At the close of morning trade Cisco said the two companies would team up to sell Cisco's high-end routers and switchers in Japan.
In the banking sector, Mizuho Financial Group Inc., Japan's largest bank, rose 0.44 percent to 459,000 yen, helping lift the banking sector subindex IBNKS.by 0.15 percent.
Dealers say the market was waiting for revised gross domestic product (GDP) figures for the July-September quarter, due on Wednesday, and machinery orders data for October the following day to get a better idea of how Japan's economy is faring.
Data on Friday showed that 112,000 U.S. jobs were created in November, well below forecasts of a gain of around 180,000.
Sluggish jobs growth in the United States, Japan's biggest export partner, is a worry to Japanese investors, coming at a time when Japan's export-led recovery is already showing signs of slowing and is under pressure from the yen.
The dollar was trading just above 102 yen on Monday, after dipping below 102 in early trade to within a hair's breadth of a five-year low of 101.83 hit on Thursday.
Most analysts see a further rise in the yen as the biggest risk facing Japanese stocks in the near term.
"If the dollar was to fall convincingly below the key mark of 100 yen it would probably give people the green light to push the Nikkei down to 10,000," said Shigemi Nonaka, chairman at Polestar Investment Management.
The Nikkei has not traded below 10,000 since December 2003.