Nikkei sags to 1-week low, Nintendo dives on loss forecast

Sun Jan 19, 2014 8:50pm EST

* Nintendo's loss forecast disappoints market
    * Japan's earnings optimism limit declines - analyst

    By Ayai Tomisawa
    TOKYO, Jan 20 (Reuters) - Japan's Nikkei average dropped to
a one-week low on Monday, tracking declines in U.S. shares,
while Nintendo Co Ltd plunged by nearly a fifth after
the game maker forecast an annual loss.
    Nintendo slid as much as 18.5 percent to 11,935 yen - its
lowest since Nov. 8 - and was the most traded stock by turnover
after the "Super Mario" creator said it now expects a full-year
loss instead of a profit and slashed its Wii U sales forecast by
almost 70 percent. 
    The Nikkei was down 0.8 percent at 15,606.79 in
midmorning trade, trading below its 25-day moving average of
15,750.84, and extending losses into a third day.
    Analysts said the market may stay lacklustre as U.S. markets
are closed on Monday for a holiday. Still, losses for Japanese
stocks should be limited on optimism towards the quarterly
reporting season due to kick off later this month, they said.
    "Foreign investors are picking up stocks including
automakers which are expected to report strong earnings, such as
Toyota and Fuji Heavy," said Takuya Takahashi, an analyst at
Daiwa Securities. He added that the Nikkei should recover the
16,000-line after investors confirm that growth for corporate
Japan is resilient.
    Exporters were mixed as the dollar was a touch softer at
104.27. Toyota Motor Corp rose 0.3 percent, Fuji
Heavy Industries, which makes Subaru cars, dropped 0.8
percent, while Sony Corp shed 0.5 percent.
    Nintendo last traded down 12 percent at 12,880 yen.
    SMBC Nikko Securities, which maintained its stock rating for
Nintendo at "underperform", cut its price target to 9,500 yen
from 11,000 yen, saying that weak sales of the Wii U are a
serious problem.
    The broader Topix fell 0.4 percent to 1,292.08.
    The JPX-Nikkei Index 400, a recently introduced
gauge comprised of firms with high return on equity and strong
corporate governance, dropped 0.6 percent to 11,641.60.