Nikkei eases, but marks best April performance in 20 years

Tue Apr 30, 2013 3:30am EDT

* Nikkei up 11.8 pct on month
    * Fanuc, Honda Motor fall after weak earnings guidance
    * Nomura up after robust quarterly profit, lifts sector

    By Tomo Uetake
    TOKYO, April 30 (Reuters) - Japanese shares fell on Tuesday,
led by index heavyweights Fanuc and Honda Motor on weak earnings
guidance, but they still turned in their best April performance
in 20 years on the back of sweeping stimulus measures unveiled
earlier in the month. 
    The benchmark Nikkei slipped 0.2 percent to
13,860.86, after popping up into positive territory several
times in the afternoon. 
    On the month, the index was up 11.8 percent and marked its
best April performance since 1993, largely driven by the Bank of
Japan's plans to inject $1.4 trillion into the economy in less
than two years to revive growth. 
    "Investors have been focused on corporate earnings. Of
course earnings are a mixed bag, so far the results appear to be
largely within the market's expectations," said Masayuki Otani,
chief market analyst at Securities Japan. 
    "Today, the overall market is quite solid except some
heavyweights, which dragged down the Nikkei."
    Fanuc Corp slumped 5.6 percent after the industrial
robot maker forecast a first-half operating profit of 62 billion
yen ($632 million), well below a full-year forecast of 175.4
billion yen in a Thomson Reuters I/B/E/S. It was the
top-weighted loser in the Nikkei, contributing 35 negative
points to the index. 
    Honda Motor Co lost 3.4 percent after the
automaker's annual operating profit estimate also came in below
market consensus. It was the second-weighted loser in the
Nikkei, contributing 11 negative points to the index. It was
also the most traded stock on the main board by turnover.
    The broader Topix index gained 0.3 percent to
1,165.13 on Tuesday, with 3.40 billion shares changing hands,
the lowest in four weeks.
    Nomura Holdings Inc climbed 4.1 percent after
Japan's largest brokerage reported its highest quarterly profit
in seven years as it cashed in on the surge in domestic shares
and booked a one-off gain on the sale of a property affiliate's
stocks. 
    Rival Daiwa Securities Group Inc rose 5 percent,
while the securities sector gained 4.6 percent to
become the best sectoral performer on the board.
    Daiwa Securities carries a 12-month forward
price-to-earnings ratio of 17.7, below Nomura's 18.6 and the
sector's average of 19.2, according to Thomson Reuters
Datastream.
   
    EARNINGS SEASON CONTINUES
    "One of the biggest takeaways for the exporters in this
earnings season is the conservative FX assumptions they have
taken in their guidance for 2013," said Stefan Worrall, director
of equity sales at Credit Suisse in Tokyo. 
    "That's probably a bit disappointing. What this underscores
is that the BOJ and policymakers still have their work cut out
for them to try to convince corporate Japan that the weaker yen
is sustainable," he added.
    Expectations that Japanese firms would sharply lift their
earnings forecasts for the fiscal year ending March 2014 had
been high after the yen weakened 20 percent since mid-November,
when Shinzo Abe, who became prime minister in December, promised
expansionary monetary and fiscal policies to boost the economy.
    During the same period, the Nikkei has jumped 60 percent.
    The yen hovered near its highest level in roughly two weeks
against the dollar on Tuesday as declining U.S. bond yields and
slowing inflation put pressure on the Federal Reserve for more
action. 
    The Japanese currency rose to as high as 97.35 yen on
Monday, its highest level in almost two weeks. It last traded at
97.74 yen.
    But some analysts say the impact of yen weakness on certain
exporters could be less than expected.
    "In the last five years ... Japanese exporters have been
actively trying to diversify their production, reducing their
sensitivity to yen strength," a trader said.
    "In the opposite way, it reduces the benefit to them from
the yen weakness," he added.
    Of the 39 Nikkei companies that have reported quarterly
results, 56 percent of them came in below market expectations,
according to Thomson Reuters StarMine. That compared with 62
percent in the previous quarter.
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