Japan's Nikkei flat as Kyocera down, Fed cut eyed

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By Aiko Hayashi

TOKYO, Jan 30 (Reuters) - Japan's Nikkei average was almost flat on Wednesday as investors punished companies with disappointing earnings results such as Kyocera Corp (6971.T) amid cautious trade ahead of an expected second U.S. Federal Reserve interest rate cut in about a week.

But shares of shippers powered up after Nippon Yusen KK (9101.T), Japan's biggest shipper, reported nearly doubled fiscal nine-month earnings and raised its full-year forecast, citing a surge in bulk carrier freight.

Katsuhiko Kodama, senior strategist at Toyo Securities, said the market is largely awaiting the outcome of the Federal Open Market Committee meeting, but some negative corporate results so far pose concerns.

"Still, we don't know for sure until we see results by Sony tomorrow," he said.

Sony Corp (6758.T) is among a slew of Japanese companies set to report earnings on Thursday.

Soichiro Monji, chief strategist of equity management at Daiwa SB Investments, said investors hate disappointing earnings results but the market is generally likely to stay in rebound mode.

"The market has factored in a slowdown in the Japanese economy and a peak in corporate earnings in the recent sell-off," he said.

"Coupled with hopes for Fed rate cuts, a technical rebound will likely continue." The benchmark Nikkei average .N225 ended the morning session up 0.1 percent or 15.71 points at 13,494.57, after rising 3 percent on Tuesday.

The broader TOPIX index added 0.6 percent or 7.85 points to 1,336.58.

The Fed's policy meeting ends on Wednesday, with markets expecting a further 50-basis-point rate cut after it slashed its key rate by 75 basis points to 3.5 percent on Jan. 22 as recession fears prompted a plunge in U.S. stocks.

On Tuesday, the Dow Jones industrial average .DJI gained 0.8 percent.

KYOCERA HIT

Kyocera, which cut its full-year profit forecast to below market expectations, lost 1.7 percent to 8,210 yen, becoming one of the biggest drags on the Nikkei 225.

Kyocera lowered its operating profit forecast on Tuesday to 140 billion yen from 151 billion yen, hurt by sluggish sales of ceramic packaging used to protect high-speed fibre-optic microchips, below the market estimate of 147.5 billion yen.

Toshiba was flat at 726 yen, after falling to as low as 692 yen, after the electronics company posted a worse-than-expected 25 percent drop in quarterly operating profit, citing tumbling flash memory chip prices. [ID:nT65272]

Among stocks that gained, shares of Nippon Yusen shot up 5.9 percent to 874 yen, extending gains following strong earnings results announced on Tuesday, while Mitsui OSK Lines Ltd (9104.T) jumped 5.9 percent to 1,304 yen and Kawasaki Kisen Kaisha Ltd (9107.T) climbed 5.6 percent to 1,071 yen.

Trade was moderate on the Tokyo exchange's first section, with 1.1 billion shares changing hands, identical to last week's morning average.

Advancers outpaced decliners by a ratio of roughly two to one. (Reporting by Aiko Hayashi)