Nikkei down 1 pct, tech stocks fall on US concern

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By Aiko Hayashi

TOKYO, April 12 (Reuters) - The Nikkei average fell 1.1 percent on Thursday with technology shares such as Advantest Corp. (6857.T) down after a fall in similar U.S. stocks and concerns about the economic outlook for the United States, one of the biggest markets for Japanese goods.

The Japanese market is largely steered by moves in Nikkei futures as investors try to adjust positions before the settlement of Nikkei options on Friday, said Masayoshi Okamoto, head of dealing at Jujiya Securities.

"But the downward revision of the U.S. gross domestic product forecast may be giving the manufacturing industry here a warning that the U.S. economy may be slowing down in the mid- to long-term," he said.

On Wednesday, the International Monetary Fund lowered the forecast it made in September for 2007 U.S. gross domestic product growth to 2.2 percent from 2.9 percent.

"In order for the market to go up, investors want to see corporate earnings results and U.S. economic growth," Okamoto said.

But Kenji Kobata, managing director at Ace Securities' research department, said the Nikkei is likely to advance gradually.

"Investors are being careful about buying stocks as the U.S. economy's soft landing has become somewhat questionable and Japanese companies are likely to announce conservative outlooks for this business year," he said.

The Nikkei .N225 finished the morning down 192.82 points at 17,477.25. The TOPIX shed 1.12 percent to 1,719.52.

Trade was active with 1.01 billion shares changing hands, climbing above 1 billion shares for the first time in a week. Declining shares outnumbered advancers by a ratio of nearly four to one.

TECH STOCKS FALL, SUMITOMO METAL UP

Technology shares fell with Advantest down 1.8 percent at 5,500 yen and Canon Inc. (7751.T) losing 2.3 percent to 6,480 yen.

Among other losers, Sanyo Electric Co. Ltd. (6764.T) declined 1.9 percent to 205 yen after the company said on Wednesday it is set to book a loss of 2.04 billion yen in its earnings for the year that just ended to cover part of the cost to recall mobile phone batteries.[ID:nT269600]

Taiyo Yuden Co. Ltd. (6976.T) dropped 4.4 percent to 2,505 yen after the company announced a plan to issue a 20 billion yen convertible bond, fuelling future supply concerns. The conversion price was set at 3,746 yen, 43 percent above Wednesday's close.

FamilyMart Co. Ltd. (8028.T) also fell 1.8 percent to 3,240 yen as the third-ranked convenience store chain operator on Wednesday said it expects just a 2.3 percent increase in its 2007/08 operating profit after dropping 9.3 percent in the year ended February.