Japan stocks edge down as yen weighs on exporters

By Aiko Hayashi

TOKYO, Nov 28 (Reuters) - Japanese stocks lost steam after opening higher on Wednesday as automakers such as Toyota Motor Corp (7203.T) slipped into reverse on lingering currency concerns with the dollar still on track to log its biggest one-month fall against the yen since early 2000.

Drugmaker Astellas Pharma Inc (4503.T) provided some support to the market after it said on Tuesday it would buy U.S. biotech company Agensys Inc for $387 million to boost its antibody research and development for cancer treatments. [ID:nT274526]

"The biggest factor for the market fall is the trend of a further strengthening yen, which hit exporters," said Hiroaki Kuramochi, managing director at Bear Stearns, adding there are no strong domestic factors to trade on.

He said a wait-and-see attitude among investors also hit the stock market as they want to see the U.S. beige book report and examine the health of the economy.

Market players will scour U.S. data later in the day including existing home sales in October and the Federal Reserve's beige book report, which provides an anecdotal summary of economic conditions nationwide.

Still, Takahiko Murai, general manager of equities at Nozomi Securities, said the fact that the market had been oversold represented a buying opportunity to some investors.

"Stocks that had been sold despite strong fundamentals are being bought back," he said.

Some blue-chip stocks such as Sony Corp (6758.T) powered higher, bucking the bearish market trend.

"It's also true that Citi's news signifies a step forward in solving the (U.S. subprime) problems, and extreme pessimism has receded," Murai said.

U.S. stocks rose on Tuesday after Abu Dhabi's $7.5 billion purchase of a stake in Citigroup Inc (C.N) spurred a rebound in financial stocks. The Nikkei average .N225 finished the morning session down 0.3 percent or 43.40 points at 15,179.45, after opening 0.3 percent higher following a rise on Wall Street.

The broader TOPIX index shed 0.1 percent to 1,477.39, having also started the day in positive territory.

The dollar dipped to 108.60 yen JPY=, down about 0.2 percent from late U.S. trade on Tuesday, when it had jumped 1.5 percent, its second-biggest one-day surge this year.

AUTOMAKERS HIT

Automakers lost ground, with Toyota down 1.6 percent at 6,000 yen and Honda Motor Co Ltd (7267.T) losing 1.9 percent to 3,590 yen.

Investors took profits in financial stocks, which gained in the previous session to price in the Citi news.

Japan's top bank Mitsubishi UFJ Financial Group (8306.T) fell 0.6 percent to 1,024 yen, while No.2 Mizuho Financial Group (8411.T) declined 0.9 percent to 562,000 yen and Sumitomo Mitsui Financial Group (8316.T), Japan's third-biggest bank, lost 1.2 percent to 891,000 yen.

Among stocks that gained, Astellas climbed 1.7 percent to 4,940 yen.

Some high-tech firms also helped support the market, with Sony jumping 2.6 percent to 5,900 yen ahead of the year-end shopping season, while TDK Corp (6762.T) added 1.1 percent to 7,520 yen.

Trade was moderate on the Tokyo exchange's first section, with 954 million shares changing hands, compared with last week's morning average of 965 million.

Declining stocks outnumbered advancing ones by 836 to 748 (Reporting by Aiko Hayashi, Editing by Michael Watson)