Nikkei flat as realtors tumble, banks sold

(Adds stocks, details)

By Elaine Lies

TOKYO, April 9 (Reuters) - Japan's Nikkei average was flat on Wednesday, giving up earlier gains as Tokyu Land Corp (8815.T) and other property firms tumbled on a weak property outlook and banks were sold on credit fears. Funai Electric Co Ltd (6839.OS) surged nearly 9 percent after Philips Electronics (PHG.AS) said it will transfer its struggling North American television business to the Japanese electronics maker. [ID:nL08832352]

U.S. stocks were lower on Tuesday after savings and loan company Washington Mutual Inc WM.N said it expects a first-quarter net loss of more than $1 billion and is cutting its dividend, dimming optimism that the worst of the credit crisis is over.

"This has been a bit of a reality check, with recent gains based entirely on hopes that the worst of the subprime crisis was over," said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments.

"Even if it seems we're past the worst of the crisis, we're facing bank earnings results from here on in and are going to be seeing implications on balance sheets."

Tokyu Land fell 8.3 percent to 644 yen after Credit Suisse on Tuesday cut its rating to "underperform" from "neutral", citing a weak outlook for the property market due to an economic slowdown.

Japan's upper house of parliament approved acting Bank of Japan Governor Masaaki Shirakawa as the central bank's permanent head on Wednesday, bringing to a close a political impasse that had left the post vacant since last month. [ID:nT209700]

But market players shrugged off the news.

"It may have a bit of an impact, but not much. Everyone's pretty much fed up," said Katsuhiko Kodama, a senior strategist at Toyo Securities. "It's all rather embarrassing."

The benchmark Nikkei .N225 was down 0.04 percent at 13,245.28, erasing earlier gains. The broader TOPIX fell 0.6 percent to 1,275.55.

PROPERTY A DRAG

Credit Suisse analyst Masahiro Mochizuki said in a research note: "We still believe Tokyu Land is one of the real estate developers most likely to survive the intense competition in the industry over the long term.

"However, in view of the deterioration in the real estate market, we expect a decline in earnings at the company."

Sumitomo Realty & Development (8830.T), a major real estate developer, dropped 5.2 percent to 1,996 yen and fellow realtor Mitsui Fudosan Co Ltd (8801.T) fell 3.7 percent to 2,225 yen.

Overall, the real estate subindex .IRLTY.T fell 3.7 percent, making it the biggest loser among the subindices.