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TOKYO, Feb 18 (Reuters) - Japanese stocks were nearly flat on Monday as the market ran out of steam in late trade, with gains in JFE Holdings 5411.T and other steelmakers offset by falls in insurers on concerns over widening subprime losses.
Shares in Aioi Insurance Co 8761.T fell 6.8 percent after the Yomiuri newspaper said its subprime-related losses were now expected to balloon to more than 80 billion yen in the current business year to March [ID:nT338705].
The standout for the day was Toshiba Corp 6502.T, which jumped after a company source told Reuters at the weekend that it planned to give up on its HD DVD format for high-definition video, leaving the field to Sony Corp's 6758.T rival Blu-ray system. [ID:nT345933] Market players generally welcomed the move, sending Toshiba shares up by more than 6 percent at one point.
“They made a clear decision, and this was recognised by the market,” said Takeshi Osawa, senior fund manager at Norinchukin Zenkyoren Asset Management.
But an absence of strong buying factors with Wall Street closed for a holiday caused the market to fall back in later trade, with slides in Hong Kong and Bombay shares also providing downward pressure on the overall market. MSCI's measure of Asia Pacific stocks excluding Japan .MIAPJ0000PUS was down 0.3 percent as of 0627 GMT.
The benchmark Nikkei average .N225 ended up 0.09 percent at 13,635.40 after earlier rising more than 1 percent. The broader TOPIX index .TOPX was down 0.1 percent after also gaining more than 1 percent.
But market players said the downside appeared to be solidifying after reports last week on Japan’s fourth-quarter economic growth and U.S. retail sales showed surprising strength in the world’s top two economies.
“It seems perhaps as if the downside’s firming up and the Nikkei now may slowly rise,” Osawa said. “Sentiment from last week appears to have lingered, resulting in some short-covering.” But Osawa said the Nikkei could slip again in coming months if the yen advances strongly against the dollar or companies post poor full-year results.
Other market players said public pension funds appeared to be buying at the downside, as they have been for the past few days, and this too would help the market firm up.
STEEL, INSURERS
Steel shares powered higher, with the iron and steel subindex .ISTEL.T becoming the biggest gainer, after Nippon Steel Co 5401.T JFE Holdings Inc 5411.T said they had agreed to pay Brazilian mining giant Vale VALE5.SARIO.N 65 percent more for iron ore under term contracts this year. The gains were due mainly to relief that one of the negative factors pressuring shares had now been played out, with anticipation for good full-year results also boosting steel shares.
JFE Holdings ended up 6.3 percent at 4,410 yen and Nippon Steel climbed 3.2 percent to 575 yen.
Aioi Insurance fell 6.8 percent to 439 yen, dragging other insurers down with it. T&D Holdings 8795.T slid 6 percent to 5,190 yen and Sompo Japan Insurance Inc 8755.T was down 2.4 percent at 864 yen. Toshiba ended up 5.7 percent at 829 yen after earlier jumping more than 6 percent. It also gained on a ratings upgrade by Nikko Citigroup to "buy/high risk" from "hold/high risk" following news of its impending decision.
Analysts said the move to abandon HD DVD would likely end the battle between consortiums led by Toshiba and Sony over the last several years to set the standard for the next-generation DVD and compatible video equipment. Sony climbed 1 percent to 4,900 yen.
Trade was moderate, with 2.17 billion shares changing hands, compared with last week’s daily average of 2.19 billion. Advancing shares beat declining ones by 957 to 681. (Reporting by Elaine Lies; Editing by Chris Gallagher)
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