October 23, 2012 / 3:00 AM / in 5 years

Nikkei inches up; Kansai Electric Power drags utilities lower

* Nikkei adds 0.1 pct, Topix slips 0.3 pct
    * Softer yen aides some exporters; BOJ expected to ease next
    * Kansai Electric Power sags on report of cutting dividend

    By Dominic Lau
    TOKYO, Oct 23 (Reuters) - Japan's Nikkei share average
inched higher on Tuesday, as gains in some exporters on the back
of a softer yen offset weakness in the utility sector after a
report said Kansai Electric Power would not pay its
    By the midday break, the Nikkei added 0.1 percent to
9,017.83 after rising as much as 9,075.58 to a four-week high
earlier in the session.
    The index had risen for a sixth straight session on Monday,
and if it finishes the day higher, it will extend its winning
streak to seven sessions and mark its longest such run since
July 2011.
    "There is no doubt that the market is now getting focused on
what the BOJ would do ... political pressure on the BOJ is
mounting," said a senior trader at a foreign bank.
    "We are in the middle of a range here. 8,500 would probably
be a buy, 9,200 would probably be a sell without any real move
on the currency. If the currency gets through 80 (yen to the
dollar) convincingly, that changes a lot of things."
    The trader said the flows were light, indicating investors
were "a bit confused" over the direction of the market after
recent gains.
    Trading was relatively light on the Nikkei, with volume at
42 percent of its full daily average for the past 90 days.
    Exporters rose as the yen hit a three-month low of 80.02 to
the dollar on Tuesday. Sources said the Bank of Japan was
leaning towards easing monetary policy again next week, with
policymakers discussing steps in addition to a further increase
in its asset-buying scheme. 
    Among exporters, industrial robot maker Fanuc Corp 
gained 0.7 percent, Nikon Corp rose 1.8 percent and
Panasonic Corp added 1.2 percent.
    The broader Topix index slipped 0.3 percent to
    But Kansai Electric Power sank 6.6 percent after Jiji news
agency said the company would not pay its previously forecast
annual dividend due to soaring cost of imported oil and gas as
the majority of its nuclear reactors remain offline.
    Chubu Electric Power Co shed 4 percent and Tohoku
Electric Power Co lost 5.3 percent.
    Nomura Securities was upbeat on the Nikkei, however.
    "We see more upside potential than downside for the stock
market in the near term," it said in a report.
    "If the preliminary October China Manufacturing PMI release
by HSBC on Wednesday indicates a higher likelihood of Chinese
economic recovery, we think there could be even further gains.
Over the next week, the Nikkei average could well head toward
the 9,200 level." 
    The benchmark Nikkei is up 6.7 percent this year, lagging a
14 percent rise in the U.S. S&P 500 and an 11.6 percent
gain in the pan-European STOXX Europe 600 index.
    The outlook for Japanese corporate earnings remains weak.
According to Thomson Reuters Datastream, Japanese companies'
one-month earnings momentum -- analysts' earnings upgrades minus
downgrades as a total of estimates -- has deteriorated further
to -12.2 percent from -6.7 percent last month.
    The pace of deterioration for the S&P 500 is not as
pronounced. It worsens to -3 percent from -2.3 percent in
September, according to Datastream.
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