Nikkei tumbles from 4-wk high on concern about China funds

Fri Oct 26, 2012 2:40am EDT

* Reports of poor earnings for Chinese funds sparks sell-off
    * Fanuc drags after H1 earnings disappoint
    * Canon weak after cutting forecast, but Advantest gains

    By Sophie Knight
    TOKYO, Oct 26 (Reuters) - Japan's Nikkei share average was
knocked off a four-week high on Friday on concern that Chinese
funds face heavy redemptions after a poor quarterly performance,
and as disappointing earnings from Fanuc Ltd dragged.
    The Nikkei fell 1.4 percent to 8,933.06 after Asian
shares slumped on a report in the China Securities Journal that
Chinese funds had posted a 75 billion yuan ($12.02 billion) loss
in the three months to September. 
    "The region is selling off quite aggressively ... but we
certainly had a good run there despite weak results in the
U.S.," said a trader at a foreign bank. "The yen has been very
encouraging and there were a lot of people getting long."
    The benchmark rallied more than 6 percent between a
two-month low on October 12 and Thursday's close as a softer yen
and expectations of substantial easing from the Bank of Japan
overshadowed poor earnings and profit warnings. 
    Sources have said the BOJ is expected to ease monetary
policy next week by expanding asset purchases by at least 10
trillion yen and may commit to injecting cash until 1 percent
inflation is achieved, a distant goal given core consumer prices
dropped 0.1 percent in the year to September. 
    "The BOJ has to decide when to spend its chips because
whatever it does, the global economy, and particularly China, is
slowing down," said Yuuki Sakurai, CEO of Fukoku Capital
Management. 
    Industrial robot maker Fanuc Ltd, which has high
exposure to China, fell 3.1 percent after the company said its
operating profit had fallen 12.6 percent in the first half and
forecast a 7.6 percent fall for the full year.
    Canon Ltd lost 3.2 percent after cutting its
full-year profit outlook by almost 10 percent and posting a
weaker-than-expected quarterly profit. Its sales were hit by
anti-Japan sentiment in China after a territorial row, as well
as slowing demand in Europe. 
    "Digital camera sales volume and profits were weaker than we
expected. In the short term, the stock is likely to rise if yen
depreciation is more than an aberration, but longer term, we
think the company needs to add to its earnings base," JPMorgan
analyst Hisashi Moriyama wrote in a note. 
    The broader Topix lost 1.4 percent to 741.23 in
strong trade, with volume at 112.6 percent of its 90-day
average.
    
    CLOUDY OUTLOOKS
    Earnings from Japanese firms have been less than stellar -
13 out of the 19 Nikkei companies reporting so far have
undershot expectations - but some companies have seen their
shares gain on relief that their results were not worse than
expected.
    Advantest Corp moved 3.6 percent higher after its
downward revision in guidance for this financial year fell
within market expectations, with traders noting the maker of
chip testing devices was still expecting a
profit. 
    Panasonic Corp lost 2.8 percent on news it may
shrink its mobile phone business as it yields to competitors
Apple Inc and Samsung Electronics Co,
boding ill for the company's earnings next week. 
    Sharp Corp added 3.8 percent after the Asahi
newspaper said the struggling TV maker was considering financial
tie-ups with U.S. tech companies such as Hewlett-Packard
, Intel Corp, Microsoft, Google
 and Apple Inc. 
    Reporting after the bell, mobile provider NTT Docomo Inc
 cut its operating profit outlook for the full year by 9
percent, while internet provider NEC Corp turned an
operating loss of 7.88 billion yen ($98 million) in the first
quarter into a profit of 47.4 billion yen for the first half.
A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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