Nikkei slips off 4-year high on pause in yen's drop; Sony rises

Wed Feb 6, 2013 10:05pm EST

* Trading volume heavy
    * Nikon nosedives on sharp profit outlook cut
    * Mazda and Fuji Heavy attractive - trader
    * Strong forecast expected for Sony - traders

    By Ayai Tomisawa
    TOKYO, Feb 7 (Reuters) - Japan's Nikkei share average
retreated on Thursday from a more than four-year high hit a day
earlier as a pause in the yen's decline and caution ahead of a
European Central Bank meeting gave investors reason to take
profits on export-driven firms. 
    The Nikkei share average shed 0.8 percent to
11,374.26 by the midday break, retreating from a high of
11,498.42 struck on Wednesday.
    The yen, which fell to a 33-month low of 94.08 to the dollar
on Wednesday, last traded at 93.51. 
    Nikon Corp plummeted as much as 19 percent to a
daily limit of 2,139 yen and its lowest level in more than two
months, as a sharp cut in its outlook disappointed investors who
had chased the stock higher over the past three months.
    The stock was the biggest loser on the board in percentage
terms and dragged down the precision machinery sector
, which dropped 5.3 percent.
    The camera maker, whose shares had climbed 45 percent since
mid-November when Prime Minister Shinzo Abe's calls for
aggressive monetary easing put the yen on a long slide, slashed
its operating profit forecast by a third, citing sluggish sales
of interchangeable-lens cameras due to increased competition.
 
    "Nikon's sharp cut in its outlook startled us... I'm not
surprised if investors are dumping the stock immediately and
even shorting it as there are better stocks to buy," said
Mitsushige Akino, chief fund manager at Ichiyoshi Asset
Management.
    Akino regarded exporters as Mazda Motor Corp and
Fuji Heavy Industries Ltd as attractive due to their
bright earnings.
    
    BUCKING WEAK TREND
    Bucking the market's overall weakness, Sony Corp 
gained 3.2 percent on expectations for strong results to be
released after the bell.
    "People are expecting that the company will raise its
outlook given the recent weakness in the yen," said Hideyuki
Okoshi, general manager at Chibagin Securities. "But further
gains in the stock should be limited if the company expects
strong earnings for the next fiscal year merely on a weak yen.
Eyes are on the performances of its main businesses."
    Separately, sentiment in Sony is rising after the Asahi
Shimbun reported that the company plans to release its new
Playstation 4 home console this year for around $430.
    
    Among other gainers, Mazda Motor soared 14.5
percent after the carmaker raised its operating profit forecast
for the year ending March 31 by 80 percent to 45 billion yen
($482 million), which would be its highest since the year ended
March 2008. 
    Shares of Mazda, which exports about 80 percent of its cars,
were the most-traded by turnover on the main board.
    Fuji Heavy Industries, which makes Subaru cars and
is seeing strong sales in the United States, its biggest market,
was 3.0 percent higher after raising its operating profit
outlook by 25 billion yen to a record 107 billion yen.
    Market strategists said a correction is natural after recent
sharp gains in the Japanese market, but it was likely to 
rise in the mid-to-long term on hopes for aggressive monetary 
easing.
    Investors were expected to take a wait-and-see approach
ahead of a meeting of European Central Bank policymakers later
on Thursday that could impact the currency market.
 
    "Hopes for 'Abenomics' are supporting the mood, but 
investors are also sensitive to the currency moves, so right 
now, even small uncertainty on Europe can be a reason to pull 
back," said Hiroichi Nishi, an assistant general manager at SMBC
Nikko Securities.
    Bank of Japan Governor Masaaki Shirakawa said on Tuesday he 
would step down, together with his two deputies, three weeks 
before the end of his five-year term in April.  
    Prime Minister Shinzo Abe has put the central bank under 
relentless pressure to do more to pull the economy out of the 
doldrums. He has made it clear that he wants a governor who will
be bolder in loosening monetary policy. 
    The broader Topix was flat at 969.09 in heavy trade,
with 2.8 billion shares changing hands by the midday break, or
117.4 percent of its full day average volume of the past 90
days.