Nikkei down slightly after briefly rising past 11,000

Sun Jan 27, 2013 10:10pm EST

* Sony jumps on Citigroup upgrade
    * Last quarter earnings expected to be poor
    * Advantest sags on report of disappointing earnings

    By Sophie Knight
    TOKYO, Jan 28 (Reuters) - Japan's Nikkei share average
briefly struck a fresh 32-month high above 11,000 on Monday
morning on a weaker yen, before heading down into negative
territory by the midday break as investors awaited further cues
from local earnings.
    The benchmark inched down 0.1 percent to 10,917.40 after
initially leaping to 11,002.86 as interest in Japanese exporters
was fanned as the yen dropped to 91 versus the dollar, promising
higher overseas revenues once they are repatriated. 
    Among those seeing fat gains was Sony Corp, which
jumped 8.8 percent after Citigroup raised its rating to "buy"
from "neutral", saying the softer yen has enabled Sony to take
more risks on operations such as the home appliance business.
    "The potent mix of 'Abenomics' and strong risk appetite
abroad is continuing to soften the yen, which means investors
are still buying stocks," said Masayuki Doshida, senior market
analyst at Rakuten Securities. 
    "However, it may be difficult for investors to move before
they see how much the weaker yen will improve Japanese
companies' performance," Doshida said. "The benchmark faces
resistance around the 11,000 level." 
    With Japan's earnings season getting into full swing this
week, investors are hoping that the yen's more than 10 percent
fall against the dollar in the past two months will improve
Japanese companies' forecasts in the year to come.
    But the yen effect may not be enough to offset slowing
demand in China, exacerbated by a diplomatic spat that chilled
interest in Japanese products, as well as an ongoing EU debt
crisis that has severely crimped consumption in the region.
    Industrial robots maker Fanuc Ltd, which had shed
5.3 percent by the midday break, cited both of those reasons
when it cut its operating forecast for the year ending March by
almost 20 percent to 178 billion yen ($2 billion) after the bell
on Friday. 
    Fanuc also said its operating profit for the nine months
ended December had dropped 13.4 percent from the previous year,
hurt by a yen that remained strong for much of that year,
although it changed its exchange rate assumption to 85 yen to
the dollar for the current quarter from a forecast of 78. 
    "We've got big tests in the coming week, like Fanuc coming
out with weak numbers, and I don't think the judgment is over on
that yet. Four percent down is not a shock," said Stefan
Worrall, director of equity cash sales at Credit Suisse.
   "It does matter if euphoria has got ahead of itself. A lot of
these stocks have already ripped on a pretty bullish macro
outlook," Worrall added.
    Advantest Corp shed 4.4 percent after the Nikkei
business daily said the chipmaker's operating profit for the
year ending March was expected to undershoot expectations as it
likely suffered an operating loss of 2 billion yen ($22 million)
in the last quarter due to slowing iPhone 5 sales.
    Hitachi High-Technologies Corp tumbled 11.3 percent
after JPMorgan cut its rating to 'underweight' from
'overweight', reflecting the company's failure to meet guidance
in the third quarter, with poor demand in its semiconductor
business contributing to a 98.1 percent slide in its operating
profit for the period. 
    "So far we've seen no positive effect from a softer yen and
several companies have cut full-year guidance. I see that
pattern continuing," said Yoshihiko Tabei, chief analyst at
Kazaka Securities. 
    "But we can hope that the softer yen and a pick-up in China
will allow companies to forecast a 20 to 30 percent increase in
profits in the year starting from April."
    Tabei added that investors would shift from buying "anything
and everything" to setting their sights on companies set to
benefit from the government's 10.3 trillion yen ($113.21
billion) economic stimulus plan when the cash begins to
circulate in the real economy.
    The broader Topix added 0.3 percent to 919.95 by the
midday break.