* Nippon Yusen, Daido Steel cut earnings guidance
* China official PMI remains weak
* Nippon Shokubai slumps after plant explosion
By Sophie Knight
TOKYO, Oct 1 Japan's Nikkei share average fell
to its lowest level in nearly three weeks on Monday morning as
profit warnings from shipping group Nippon Yusen KK and
Daido Steel Co Ltd underscored concerns over slowing
Weak economic data also dented confidence, with
manufacturing activity in China, Japan's biggest export market,
still in contraction in September, according to the official
purchasing managers index.
Business sentiment for big Japanese manufacturers worsened
in the three months to September and will stay gloomy, the
central bank's tankan survey showed.
The Nikkei shed 0.8 percent to 8,796.82 by the
midday break on Monday, breaking below its 75-day moving average
"Sentiment in Japan was more pessimistic than expected and
could yet worsen, China's PMI wasn't great, we've got the United
States' ISM tonight; it's a perfect environment to sell," said
Fumiyuki Nakanishi, manager of investment and research at SMBC
"Investors have also guaranteed their mid-year dividends so
they're not too concerned about share prices falling," he added,
referring to the mass of Japanese firms that went ex-dividend
last Wednesday, triggering a 2 percent fall for the benchmark.
Nippon Yusen, which has fallen 30.5 percent this year,
blamed weak business conditions for the cut in its first-half
earnings guidance. The stock fell 1.5 p e rcent on Monday morning.
Daido Steel also cut its interim profit forecast, citing
securities valuation losses and weak shipments of its specialty
steel products. Its shares dropped 6.1 percent.
"Macro figures are not overly impressive," a trader at a
foreign brokerage said. "We've got some auto sales expected to
come through weak."
U.S. auto sales figures are due out early this week. The
Nikkei newspaper also reported over the weekend that sales of
new cars in Japan for September, due out later in the day, would
Toyota Motor Corp and Nissan Motor Co lost
1.6 and 2 percent respectively.
But a dealer said his clients were picking up cyclical
stocks, which have a relatively higher correlation to the health
of the economy, and China-related plays.
"My suspicion is that there is some foreign money sloshing
around today. Foreigners are putting a little bit of risk on,
and the domestics are not doing much right now," he said.
Chemicals maker Nippon Shokubai Co Ltd slumped 13.4
percent to hit a more than 17-month low and was the second
most-traded stock by turnover on the main board, after Japanese
media said two acrylic acid storage tanks and one toluene tank
at the company's plant in western Japan exploded on Saturday
Rivals Sanyo Chemical Industries Ltd and Sumitomo
Seika Chemicals Co Ltd, which are likely to benefit
from a drop in Nippon Shokubai's supply of acrylic acid, the
main ingredient used in diapers, surged 6.2 percent and 2.9
percent, re sp ectively.
Elsewhere, Japan Tobacco Inc slipped 2.6 percent as
a tobacco tax hike comes into effect in France, which could hurt
The broader Topix index dropped 1 percent to 730.09
by the midday break, with volume at just 39.4 percent of its
full-day average over the last 90 days.