CORRECTED-Nikkei edges higher in cautious trade ahead of earnings, Fed outcome

Tue Jul 30, 2013 12:21am EDT

(Corrects the day of week to Monday in 7th paragraph)
    * Nikkei rises 0.2 pct, Topix up 0.5 pct
    * Yen resumes its downward slide against dollar
    * Exporters lead gains
    * Nikkei seen in bearish bias in midterm - fund manager

    By Tomo Uetake
    TOKYO, July 30 (Reuters) - Japan's Nikkei average on Tuesday
rebounded from a one-month low after the yen resumed its
downward slide to the dollar, but many investors remained on the
slidelines ahead of the peak of the earnings season and the
outcome of a U.S. Federal Reserve meeting.
    The benchmark Nikkei rose 0.2 percent to 13,684.99
in midmorning trade, after opening slightly lower, while the
broader Topix gained 0.5 percent to 1,134.00.
    "Although the market is seeing a technical rebound, there
are few factors to buy shares at the moment," said Yasuo Sakuma,
portfolio manager at Bayview Asset Management. "I suspect that
foreign investors were unwinding a large buildup of their
positions in Nikkei futures."
    Sakuma said if the government fails to raise the sales tax
rate as planned, it will be a big disappointment for foreign
investors, who have been the main buyers of Japanese equities.
"I think the Nikkei may remain in bearish bias in the next few
months."
     Despite holding the strongest political mandate of any
Japanese prime minister in years, there are signs Shinzo Abe is
seriously rethinking the plan out of concern it could derail a
nascent economic recovery he has crafted with an aggressive
policy mix of fiscal and monetary stimulus, dubbed Abenomics.
 
    However, Abe risks upsetting the markets by giving the
appearance of backtracking on promised reform.
    On Monday, the Nikkei tumbled 3.3 percent to its lowest
close since June 27, breaking below its 25 and 75 day moving
averages on the same day.
    The benchmark has fallen 7.6 percent over the last four
sessions, but is still up 11 percent since April 4, when the
Bank of Japan unveiled sweeping stimulus measures to jump-start
the moribund economy and end years of stubborn deflation. The
market is up 32 percent this year, underpinned by Abenomics.
    The dollar last traded at 98.10 yen, moving away from
its nearly one-month low of 97.61 yen touched on Monday, after
data released early on Tuesday showed Japanese industrial output
fell for the first time in five months in June. 
    A weaker yen tends to make export-reliant Japan's products
more competitive in the global market.
    Exporters rose, with Sony Corp up 3 percent, Toyota
Motor Corp 1.7 percent higher, and Olympus Corp
 up 4.6 percent.
    On the downside, Hitachi Construction Machinery Co 
tumbled 5.5 percent after the construction machinery maker said
its operating profit dropped 27.9 percent for the April-June
quarter.
    Analysts also said that investors are reluctant to take
positions before key economic events at home and abroad this
week, such as the peak of the corporate earnings season, the
outcome of a Federal Reserve meeting and Chinese manufacturing
data.
    On Tuesday, companies including Hitachi Ltd,
Kawasaki Heavy Industries Ltd, Tokyo Electron Ltd
, All Nippon Airways Co Ltd and KDDI Corp
 will report their first-quarter results.
    In the United States, market participants will scrutinize
the Federal Open Market Committee policy statement this
Wednesday for any additional clues about the Fed's intended
timeline for scaling back its quantitative easing.
    Speculation the Fed might start to trim its stimulus in
September and slowing growth in China, Japan's second biggest
export market, have roiled global markets in recent months. 

 (Editing by Shri Navaratnam)