Nikkei up 0.2 pct, banks sold on Merrill loss
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TOKYO, Oct 25 (Reuters) - Japan's Nikkei average crept up 0.2 percent on Thursday, after Wall Street ended the session only slightly lower despite a big loss reported by Merrill Lynch.
Still, the upside was heavy as a stronger yen against the dollar put pressure on exporters such as Canon Inc (7751.T).
Bank shares were also sold after Merrill MER.N, the world's largest brokerage, reported a $2.3 billion loss and write-downs of $7.9 billion for bad bets on mortgages and leveraged loans.
"The market should bounce after falling yesterday in anticipation of a large decline on Wall Street on Merrill's loss. But it lacks power to keep rising," said Takashi Ushio, head of investment strategy division at Marusan Securities.
"With U.S. durable goods and home data out later today, a cautious mood is likely to hold down the upside, and the Nikkei index may even dip in the afternoon."
Market participants also said investors were also holding off ahead of earnings reports by big companies. Sony Corp (6758.T), Canon and Honda Motor (7267.T) are among companies to report after the close.
The benchmark Nikkei .N225 ended the morning session up 34.75 points at 16,393.14. The broader TOPIX index was down 0.3 percent at 1,558.68.
Trade was light, with 807 million shares changing hands, compared with the last week's daily morning average of 844 million shares.
Declining shares beat advacing ones by 986 to 604.
BANKS DOWN
Bank shares were sold after Merrill's big losses rekindled worries over the health of financial institutions.
Mizuho Financial Group fell 3.1 percent to 593,000 yen and Sumitomo Mitsui Financial Group Inc (8316.T) dropped 1.2 percent to 830,000 yen. Mitsubishi UFJ Financial Group Inc (8306.T) shed 1.5 percent to 1,023 yen.
"Japanese banks' exposure to subprime losses has been said to be limited, but Merrill's losses led many to wonder whether this country's financial institutions are really shielded from the problems," Marusan's Ushio said.
Digital camera maker Canon fell 2.8 percent to 5,570 yen as the dollar slid to around 114.05 yen JPY= after falling 0.5 percent to 114.20 in late New York trade. Continued...
