REFILE-Nikkei eases 0.4 percent, earnings disappointments hurt, Komatsu tumbles

Mon Oct 28, 2013 10:38pm EDT

* Nikkei drops 0.4 pct, Topix down 0.3 pct
    * Komatsu tumbles 8.6 pct after cutting profit outlook
    * Hedge funds, Japanese retail investors taking profits

    By Tomo Uetake
    TOKYO, Oct 29 (Reuters) - Japanese stocks slid on Tuesday
morning, hit by Komatsu Ltd dropping sharply after the
world's second largest equipment maker issued a profit warning,
dragging down other companies exposed to emerging markets.
    The earnings season has failed to impress so far, raising
doubts about Japan Inc.'s outlook and hampering the broad
market.
    The Nikkei fell 0.4 percent to 14,334.90 in
mid-morning trade, after climbing 2.2 percent on Monday. Support
for now is seen around  an important technical level -- Ichimoku
cloud top -- at 14,235.    
    Komatsu tumbled as much as 8.6 percent to a two-month low
after the company cut its full-year operating profit forecast by
more than 30 percent on Monday, citing a worse-than-expected
drop in demand for mining equipment. It was the
most-traded stock by turnover on the main board.
    The surprisingly downbeat announcement hurt its rivals and
other companies with high exposure to China and emerging
markets.
    Industry peer Hitachi Construction Machinery Co Ltd
, lost up to 7.3 percent to hit a three-week low after
the company reported a 33.6 percent drop in its April-September
net profit. 
    Emerging markets-sensitive tyre maker Bridgestone Corp
 fell 0.9 percent. 
    Traders say the disappointing earnings reports have prompted
some investors to book profits from across the market.
    "I expect people to take more profits as the market will be
running out of positive factors after earnings," said Kyoya
Okazawa, head of global equities and commodity derivatives at
BNP Paribas in Tokyo.    
    "Buying by long-only players are subdued this week.
Outperformers this year with high foreign ownership, such as
SoftBank, are likely to be prone to profit-taking," Okazawa also
said.
   Index heavyweight SoftBank Corp fell 1.2 percent.
   KDDI Corp provided some welcome positive news on 
earnings and bucked the market. The stock rose 0.8 percent after
the mobile operator's net profit for the April-September period
jumped 104.4 percent from a year earlier to a record 163.01
billion yen ($1.67 billion) due mainly to strong smartphone
sales. 
    Some overseas hedge funds were cashing in ahead of book
closing in late November, said Yasuo Sakuma, portfolio manager
at Bayview Asset Management.
    Investors will have further trading opportunities from
another batch of earnings later in the day, including from  Kobe
Steel Ltd, Hitachi Ltd, Fanuc Corp,
and Tokyo Electron Ltd.
    Markets are also watching out for this week's outcomes of
policy meetings from the U.S. Federal Reserve and the Bank of
Japan, which are widely expected to keep policy on hold. 
    The broader Topix shed 0.3 percent to 1,195.36 in
moderate trade, with volume at 47.7 percent of its full daily
average for the past 90 trading days. 
    The benchmark Nikkei has risen 38 percent so far this year,
driven up by aggressive BOJ and government stimulus measures.