Japan stocks erase gains, Sony shares strong

(Updates to midsession)

By Elaine Lies

TOKYO, Sept 5 (Reuters) - Japanese stocks slipped into negative territory on Wednesday, with the benchmark Nikkei stock average down 0.07 percent in thin trade amid a dearth of trading incentives, although tech firms such as Sony Corp (6758.T) bucked the trend to power upwards.

Sony shares surged after the electronics conglomerate said it would list shares of its financial arm on the Tokyo Stock Exchange next month, raising up to $3 billion in an initial public offering to fund its core electronics business.

Other exporters also forged ahead, with Nissan Motor Co (7201.T) among notable gainers.

Investors have turned wary, preferring to stand back and wait for U.S. indicators due out later this week for further clues to the health of the U.S. economy, with some choosing to unload shares in the absence of strong reasons to buy.

"The fact that foreign investors turned sellers this morning, when added to the general mood, prompted selling when the Nikkei went above 16,500," said Shinji Igarashi, equity manager at the sales department of Chuo Securities.

"Given that this was a level at which there'd been a large volume of trades when the market was falling last month, I think many were waiting simply waiting for a chance to get rid of their holdings."

Orders for Japanese stocks placed through 13 foreign securities houses before the start of trade on Wednesday had indicated an intention to sell a net 9.2 million shares.

But few thought the market was likely to keep going downwards given a strong performance by Wall Street on Tuesday, with light trading volume seen curbing movements in either direction.

No immediate impact was seen from a newspaper report that Japan's new environment minister had apologised for irregularities in past political fund reports.

The Nikkei .N225 lost 11.92 points to close the morning at 16,408.55, while the broader TOPIX index was down 0.54 percent or 8.67 points at 1,588.07.

Trading volume was modest, with 763 million shares changing hands, up slightly from last week's morning average of 669 million shares. Decliners led advancers by 1,281 to 314.

TECHS POWER UP

Sony shares were up 3.6 percent at 5,810 yen, outperforming the electronics subindex .IELEC.T which was up 0.34 percent. Fujitsu Ltd (6702.T) was up 2.1 percent at 822 yen and NEC Corporation (6701.T) up 2.4 percent at 565 yen.

Shares of Nissan rose 2 percent to 1,127 yen after Japan's third-biggest automaker reported a 6.3 percent increase in U.S. sales for August, boosted by stronger results for its flagship Altima sedan. [ID:nN04416161]