Nikkei down 0.6 pct ahead of earnings, holiday

(Adds comment, stocks, details)

By Aiko Hayashi

TOKYO May 1 (Reuters) - Japan's Nikkei stock average slipped 0.6 percent on Thursday, as investors sold recent gainers such as Mitsubishi UFJ Financial Group (8306.T) and other bank shares ahead of a wave of earnings announcements and national holidays.

Kirin Holdings Co Ltd (2503.T), a brewer, dropped more than 6 percent after its quarterly operating profit fell 46 percent and a brokerage downgraded its shares. Earth-moving equipment maker Komatsu Ltd (6301.T) rose after forecasting 5 percent profit growth this year due to a construction boom in China. [ID:nT30GW9818] [ID:nT1793]

But trade was slow on Thursday as most major Asian markets, except for Japan and Australia, were closed for May 1 Labour Day holidays and investors looked towards U.S. manufacturing and jobs data due on Thursday and Friday.

"Investors can't really move as the big event -- the Fed meeting -- is over and until they see the U.S. market moves after the holiday here and a series of upcoming important earnings results," said Naoki Koga, a senior fund manager at Toyota Asset Management.

He said the market will likely pay particular attention to earnings by blue-chip stocks such as Sony Corp (6758.T) and Toyota Motor Corp (7203.T) as the health of the U.S. and Japanese economies would be reflected in their outlooks.

"For now, it looks like investors simply took profits in banks and property firms that had led a rebound since the market hit bottom on March 17," Koga said.

Japanese markets will be closed on Monday and Tuesday for the Golden Week holiday.

Toyota will report results on May 8 and Sony is set to announce earnings on May 14.

The Nikkei average .N225 shed 83.13 points to end at 13,766.86. It has gained about 18 percent since hitting a low for the year on March 17.

In April, the benchmark gained 10.6 percent, the biggest monthly percentage gain since July 1995, when it jumped 14.9 percent.

The broader TOPIX index .TOPX fell 0.9 percent or 12.55 points to 1,346.10.

The Federal Reserve cut interest rates by the predicted 25 basis points on Wednesday but failed to deliver an unequivocal statement that the worst was over for the economy. [ID:nN30479986]

Katsuhiko Kodama, a senior strategist at Toyo Securities, said Japanese stocks no longer look cheap with the Nikkei 225 issues trading at a price-earnings ratio of about 16 times, capping further gains in the market.

"Investors pick up stocks with solid earnings, but a market rebound as a whole seems to have ended," he said.

"For the Nikkei to break above 14,000, investors need to know how much profit declines Japanese companies expect for the year and if they would revise up their full-year forecasts at the April-June earnings announcements."

BANKS UNDER PRESSURE

Financial shares slid after recent sharp gains on views the worst of the subprime problems is over.

Shares of Mitsubishi UFJ fell 3.8 percent to 1,101 yen, while No.2 bank Mizuho Financial Group (8411.T) skidded 5 percent to 513,000 yen and Sumitomo Mitsui Financial Group (8316.T), the third-biggest bank, shed 2.7 percent to 871,000 yen.

Nomura Holdings Inc (8604.T), Japan's biggest brokerage, declined 2.6 percent to 1,761 yen.

Property firms also dragged on the market. Mitsui Fudosan (8801.T) gave up 1.3 percent to 2,585 yen despite projecting operating profit to rise 12 percent to 200 billion yen ($1.9 billion) in the year to March 2009, in line with consensus forecasts after posting a 7 percent climb for the January-March quarter to 77.2 billion yen.

Mitsubishi Estate Co Ltd (8802.T) lost 5.1 percent to 2,865 yen and Sumitomo Realty & Development Co (8830.T) slid 3.7 percent to 2,505 yen.

Kirin fell 6.6 percent to 1,728 yen after the earnings results for the January-March period prompted Nomura Securities to downgrade the stock to "3" from "2."

Nomura analyst Yoshiyasu Okihira said it would be hard for Kirin to hold down marketing costs for soft drinks as it aims to boost the market share for a variety of products amid keen competition, while rising raw material costs continue to weigh.

On the positive side, Komatsu, the world's No.2 maker of earth-moving equipment, gained 2.2 percent to 3,220 yen.

Mitsubishi Electric Corp (6503.T) jumped 5.1 percent to 1,116 yen, extending gains after it issued earnings guidance of flat operating profit for the current business year, above some analysts' expectations. (Reporting by Aiko Hayashi; editing by S. Hardach)