Nikkei flat as exporters' gains offset by banks
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TOKYO, May 14 (Reuters) - Japan's Nikkei share average ended the morning flat on Wednesday, as rises in exporters such as Honda Motor Co Ltd (7267.T) on a softer yen were offset by declines in banks after U.S. Federal Reserve Chairman Ben Bernanke said financial markets remained troubled.
The market was also dented by index heavyweight Tokyo Electron Ltd (8035.T), which fell after the world's second-largest maker of semiconductor equipment forecast profit to halve this year as its customers rein in spending. [ID:nT246620]
"Bernanke's comments on financial troubles hit financial shares such as Mizuho, which had been leading the Tokyo market's recent rebound," said Noritsugu Hirakawa, strategist at Okasan Securities.
The benchmark Nikkei average .N225 ended the morning down 0.02 percent at 13,951.53. The broader TOPIX index fell 0.1 percent to 1,358.21.
Mizuho Financial Group (8411.T), Japan's No.2 banking group, fell 3.1 percent to 507,000 yen, and No.1 Mitsubishi UFJ Financial Group (8306.T) lost 4.3 percent to 1,031 yen.
Japan's largest brokerage, Nomura Holdings Inc (8604.T), fell 2.9 percent to 1,738 yen.
Bernanke said on Tuesday that the credit crisis was not over, even as his colleagues revealed growing concerns about inflation that could signal a pause in a run of interest rate cuts. [ID:nN13441127]
Adding to concerns for the financial sector, rating agency Moody's Investors Service said losses for residential mortgage debt were worse than it expected and could hurt the capitalisation levels of bond insurers MBIA Inc (MBI.N) and Ambac Financial Group Inc (ABK.N). [ID:nN13397223]
Japan's corporate earnings season is well underway, with Sony Corp (6758.T) among major firms due to announce results later in the day.
Many firms that have announced results so far have given a weak outlook for this year, blaming a stronger yen, rising raw materials costs and a slowdown in the U.S. economy.
Coupled with the market's sharp gains last month, weak projected earnings have made Japanese stocks less attractive for investors looking for value investments.
Katsuhiko Kodama, senior strategist at Toyo Securities, said the Tokyo market's rebound since mid-March is probably over.
"In terms of price-to-earnings ratio, Japanese stocks are not cheap any more," he said. "For the market to go up further, we have to wait for companies to lift their earnings outlooks after the first quarter."
JGC SHINES Continued...
