Nikkei slips on Fed worries, poor earnings

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By Elaine Lies

TOKYO, Jan 30 (Reuters) - Japanese stocks slipped on Wednesday as investors dumped shares on worries before a Federal Reserve rate cut decision, with Kyocera Corp (6971.T) and other chipmakers down after a barrage of bad news including poor corporate earnings. Banks tumbled in afternoon trade after reports that Mizuho Financial Group (8411.T) is considering injecting an additional $1.9 billion into its unit Mizuho Securities, as the brokerage continues to falter from subprime investments.

The Fed is widely seen following up last week's emergency 75 basis point interest rate slash, its biggest in a quarter century, with another cut of 25 or 50 basis points after a two-day meeting ending later in the day.

"Investors are dumping shares since there really isn't any good reason to buy, with the Fed decision coming up along with a lot of U.S. indicators," said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.

The market is also nervous about Japanese company earnings, which peak on Thursday when Sony Corp (6758.T) is among those announcing. "The market is very sensitive to poor results, resulting in selling. There are good results, but fewer of them, and they don't stand out as much," Akino added.

About 200 companies that have already reported results on average expect to see a 13 percent rise in recurring profit for the year ending in March, according to data by Shinko Research Institute.

Nearly 14 percent of those who already reported revised down their full-year forecasts, while 82 percent stuck to their original projections.

Among those hit by poor earnings was Kyocera, which on Tuesday lowered its operating profit forecast to 140 billion yen from 151 billion yen, hurt by sluggish sales of ceramic packaging used to protect high-speed fibre-optic microchips. The market had estimated 147.5 billion yen.

Kyocera finished down 2 percent at 8,180 yen, become one of the larger drags on the Nikkei.

The benchmark Nikkei .N225 closed down at 0.99 percent, at 13,345.03, a loss of 133.83 points. The broader TOPIX was down 0.7 percent at 1,320.11.

CHIPMAKERS AND BANKS BATTERED Other chip-related stocks shared the battering, with Shin-Etsu Chemical (4063.T) and Sumco Corp (3436.T) tumbling after Sumco said on Tuesday that it would expand a plant in western Japan and raise capacity, prompting JP Morgan to cut Sumco's price target.

"Concern about wafer shortages is not an issue at present. If anything, oversupply looks to be emerging," wrote Nobuhito Owaki, adding that this raised concerns about lower pricing and was also bad news for Shin-Etsu Chemical.

Shin-Etsu Chemical was down 4.8 percent at 5,560 yen, becoming the second-biggest drag on the Nikkei according to volume weight. Sumco fell 7.8 percent to 2,300 yen.

Elpida Memory (6665.T) slid after the DRAM chip maker said on Tuesday it had a deeper-than-expected quarterly loss of 8.9 billion yen against analyst estimates of a loss of 3.1 billion yen. It finished down 2.2 percent at 3,600 yen.

Mizuho Financial slid and dragged its banking peers with it after Japanese media reports on its subprime losses, with the fall picking up speed in the afternoon after the Nikkei business daily reported the additional credit injection into Mizuho Securities.