Nikkei dips 0.2 pct, exporters sold on firmer yen

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By Taiga Uranaka

TOKYO, May 12 (Reuters) - Japan's Nikkei share average dipped 0.2 percent on Monday, down for a third day as exporters such as Honda Motor (7267.T: Quote, Profile, Research) were dented by a firmer yen against the dollar.

Financials also extended losses, with Japan's largest bank Mitsubishi UFJ Financial Group (8306.T: Quote, Profile, Research) falling 2.9 percent amid rekindled concerns about the health of the sector following a massive loss by American International Group (AIG.N: Quote, Profile, Research).

"The market's weak moves could be a signal that the rebound from March 17 is at its peak," said Kenichi Hirano, operating officer at Tachibana Securities.

After hitting the recent bottom on March 17, the Nikkei regained nearly 20 percent by the middle of last week, with bank shares leading the rebound.

While the index still is 25 percent below last year's high, many market analysts say Japanese stocks are no longer cheap given the weak outlook for corporate earnings.

So far, 43 percent of companies listed on the Tokyo stock exchange's first section have reported earnings and they forecast a 6 percent decline in recurring profit, or pretax profit, for the year ending in March 2009, data from the Shinko Research Institute shows.

"(The market's direction) depends on corporate outlooks. It changes on how investors see fluctuations in currencies and the cost of raw materials," said Hiroaki Osakabe, fund manager at Chibagin Asset Management.