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
JGC Corp (1963.T) rose 3.4 percent to 2,125 yen after the Nikkei business daily reported on Wednesday that the plant engineering firm had recently acquired a 100 percent stake in an oil and gas field in Louisiana and has succeeded in extracting 1,000 barrels of oil and gas per day.
Digital camera maker Canon Inc (7751.T) rose 1.5 percent to 5,490 yen and Honda rose 2.2 percent to 3,290 yen.
Tokyo Electron shed 2.8 percent to 6,640 yen, the biggest drag on the Nikkei.
Astellas Pharma (4503.T) surged 5.3 percent to 4,390 yen after announcing on Tuesday that it would cancel 2.89 percent of its outstanding stock on June 24 after buying back up to 40 billion yen ($385 million) worth of its own shares.
It also said that January-March operating income had slid 24 percent to 30.5 billion yen, roughly in line with expectations. [ID:nT172082]
Nippon Telegraph & Telephone Corp (NTT) (9432.T) soared 10 percent to 493,000 yen after Japan's biggest phone operator said it would buy back up to 200 billion yen worth of its own shares and would hike dividends by 22 percent. [ID:nT366150]
NTT said its quarterly operating profit tripled in January-March on pension savings but forecast a 11 percent fall for this business year.
Trade picked up slightly, with some 943 million shares changing hands compared to last week's morning average of 933 million.
Advancers outnumbered decliners by more than two to one. ($1=103.76 yen)
(Editing by Brent Kininmont)
