Japan stocks fall as banks, steel lose early gains

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By Taiga Uranaka

TOKYO Dec 19 (Reuters) - Japanese stocks extended losses into a sixth day after banks including Mitsubishi UFJ Financial Group (8306.T) failed to sustain earlier gains as investors were quick to book profits amid thin trade.

Chip-related firms such as Advantest Corp (6857.T) and Tokyo Electron Ltd (8035.T) were among stocks dragging down the market after they fell on weak order data.

"The market just lacks the energy. Retail investors were hurt in the recent sell-off, and foreign investors are effectively on vacation," said Shigemi Nonaka, special adviser at Polestar Investment Management. "The market was mostly moved by short-term dealings. There is not much reason to sell, but not much to buy either."

Bank shares continued to take a roller-coaster ride, with Japan's three largest banks rising sharply in the morning session after Credit Suisse analyst Shinichi Ina lifted his ratings on Mitsubishi UFJ and Mizuho Financial Group Inc (8411.T) to "outperform" from "neutral", saying current valuations were appealing.

But Mitsubishi UFJ ended down 1.1 percent at 1,031 yen after rising as much as 2.6 percent. Mizuho Financial fell 1.3 percent to 529,000 yen.

Steelmakers also met the same fate. They jumped after the Nikkei business daily said Nippon Steel Corp (5401.T) and two other domestic partners would bolster capital ties to counter the rapid growth of ArcelorMittal (ISPA.AS).

Nippon Steel finished up 0.2 percent at 617 yen after rising as much as 4.2 percent.

The two partners both declined, with Sumitomo Metal Industries Ltd (5405.T) ending down 0.4 percent at 449 yen and Kobe Steel Ltd (5406.T) off 0.6 percent at 340 yen.

Pointing to a lack of energy and domestic factors to drive up the market, Masayoshi Okamoto, head of dealing at Jujiya Securities, said the Tokyo market has been losing its independence and increasingly following moves of overseas markets.

The Tokyo market has been seen opening in line with Wall Street's close, with its afternoon session influenced by Asian markets' openings, which in turn track the U.S. market, he said.

"What I can say about the recent Tokyo market is that it is spineless," he said. "It was osteoporosis but now it has no bones."

The benchmark Nikkei .N225 ended the session down 1.2 percent at 15,030.51. The index has lost 6.3 percent in its six-day losing streak.

The broader TOPIX .TOPX fell 0.9 percent to 1,456.79.

Trade was light, with 1.8 billion shares changing hands, compared with last week's average of 2.1 billion. Declining shares beat advancers by nearly five to one.

CHIP GEAR MAKERS DOWN

Chip-tester maker Advantest lost 3.2 percent to 3,040 yen after the industry group said orders for chip gear rose in November but remained short of sales. [ID:nT142019].

Chip-making equipment firm Tokyo Electron Ltd (8035.T) fell 3 percent to 6,520 yen.

Mitsubishi Corp (8058.T) rose as much as 4.7 percent before ending up 0.8 percent at 2,995 yen after UBS started coverage on Japan's largest trading house with a "buy" rating and a 4,300 yen target price, citing expectations for continued growth in coal and other commodities businesses.

NTT DoCoMo Inc (9437.T) rose 1.7 percent to 179,000 yen on news that Japan's top mobile phone carrier has held talks with Apple Inc (AAPL.O) about the possibility of selling Apple's popular iPhone in Japan. [ID:nT157688]

Apple is also in talks with No. 3 mobile carrier Softbank Corp (9984.T) about launching the iPhone, but both have balked over the share of subscriber revenue that Apple is demanding, sources said on Tuesday. Shares of Softbank fell 1.5 percent to 2,290 yen.

Nippon Kayaku Co Ltd (4272.T) tumbled by its 100 yen daily limit, or 11.2 percent, to 792 yen, after it slashed its group earnings forecasts for the year ending May 2008 on shrinking demand for polariser films for rear-projection TVs.

Nippon Kayaku, a chemical producer, revised down its net profit outlook to 6.7 billion yen from 9.5 billion yen and cut its operating profit projection to 13.6 billion yen from 15.5 billion yen. (Editing by Mike Miller)