Nikkei retreats from 1-week high; Honda, Toshiba fall after earnings

Wed Oct 30, 2013 9:24pm EDT

* Honda Motor down on disappointment it didn't upgrade
earnings f'cast
    * ANA hits two-month low after nearly halving guidance
    * Sharp, Sony, SoftBank to report results after mkt close

    By Dominic Lau
    TOKYO, Oct 31 (Reuters) - Japan's Nikkei share average
pulled back from a one-week high on Thursday morning on earnings
concerns, with blue-chips Toshiba Corp and Honda Motor
Co Ltd coming under pressure after reporting quarterly
results.
    Honda lost 1.5 percent as investors were disappointed that
the automaker kept its operating profit target for the year to
next March unchanged at 780 billion yen ($7.95 billion). That
compared with a consensus forecast of 827.9 billion yen from 23
analysts. 
    Toshiba dropped 1.8 percent, with analysts expressing
concerns that it relies too heavy on NAND memory chips as its
earnings driver as the cycle may be peaking out. 
 
    The Nikkei slipped 0.2 percent to 14,468.58 in
mid-morning trade, ahead of the outcome of a Bank of Japan
meeting later in the day, after gaining 1.2 percent in the
previous session.
    The Japanese central bank is expected to slightly revise up
its economic growth forecast to around 1.5 percent for the next
fiscal year on hopes a government stimulus package will offset
slowing exports to Asia. 
    The BOJ meeting followed a less dovish statement from the
U.S. Federal Reserve overnight, which prompted profit-taking in
U.S. stocks. 
    The benchmark Nikkei is flat this month. The uninspiring
October performance came after a 8 percent rally in September,
its best monthly performance since 1968. Still, the index is up
39 percent this year.
    "It's month-end, so some programme trading may be running in
the market," a senior trader at a foreign bank in Tokyo said.
    "The key is whether we can close up above 14,500," he said,
adding that the flows were mainly focused in earnings-related
stocks.
    
    ANA HIT TURBULENCE
    All Nippon Airways was the third-most traded on the
main board by turnover after the carrier almost halved its
operating profit forecast for the year ending March 2014. The
stock was down as much as 6 percent to a two-month low.
    Rival Japan Airlines Co Ltd, which is to report
quarterly results later in the day, dipped 0.2 percent.
    Sony Corp, Panasonic Corp, Sharp Corp
 and mobile operator SoftBank Corp are also due
to announce their earnings on Thursday.
    Panasonic climbed 3.7 percent to a five-month high after it
secured further lithium-ion battery orders from Tesla Motors Inc
 for its electric cars.  
    Of the 48 Nikkei companies that have so far reported
quarterly earnings, 56 percent of them either beat or met market
expectations, Thomson Reuters StarMine data showed. That
compared with 58 percent in the previous quarter.
    Another trader said some quant funds were seen buying
defensive and domestic-focused names as they sought to rebalance
their books. 
    The broader Topix index was flat at 1,204.60, with
trading volume at 31 percent of full daily average for the past
90 days.
    Despite the rally so far this year, valuations in Japanese
stocks were not too taxing. The Topix carried a 12-month forward
price-to-earnings ratio of 14.2, below a 10-year average of
16.1, according to Thomson Reuters Datastream.
    It was also cheaper than the U.S. S&P 500's 14.7.
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