* Strong Japanese earnings limit declines
* Correction likely be short-term - fund manager
By Ayai Tomisawa
TOKYO, Aug 1 Japan's Nikkei share average
dropped on Friday morning after U.S. shares languished on
concerns that interest rates could rise sooner than expected,
but strong earnings from Sony Corp and Panasonic Corp
limited the losses.
The Nikkei dropped 0.3 percent to 15,581.03 in
mid-morning trade. For the week, the index looked set to gain
The U.S. S&P500 stock index posted its worst daily fall
since April on worries that the Federal Reserve could raise
interest rates sooner than some have expected after news that
U.S. labour costs recorded their biggest gain in more than 5-1/2
years in the second quarter.
"The market is very sensitive about the direction of U.S.
interest rates now," said Masashi Oda, chief investment officer
at Sumitomo Mitsui Trust Bank. "The data triggered profit-taking
since U.S. shares were at record highs and Japan shares were
hitting multi-month highs recently. It will likely be a
He added that Japanese corporate earnings for the April-June
quarter have so far boosted expectations that companies have
managed to weather the impact of a national sales tax hike
enacted in April.
Sony jumped 6.5 percent to 1,887 yen, the highest since late
April and was the third most-traded stock after its quarterly
operating profit unexpectedly doubled, helped by a strong
performance in its games and networks division.
Panasonic soared 3.1 percent to 1,296 yen, the highest since
March 11 after it posted an 28 percent rise in operating profit
for the first quarter, beating analyst expectations.
Other exporters lost ground on profit-taking, with Toyota
Motor Corp shedding 0.6 percent and Honda Motor Co
dropping 1.2 percent.
The broader Topix shed 0.4 percent to 1,284.70, and
the JPX-Nikkei Index 400 declined 0.4 percent to
(Editing by Eric Meijer)