April 25, 2013 / 1:56 AM / 5 years ago

CORRECTED-Nikkei climbs to near 5-year highs on weak yen; Canon, Nintendo sink

(Corrects to add billion in third bullet)
    * Weak yen trend underpins market
    * Canon, Nintendo suffer as investors disappoint with
    * Shiseido falls after writing down $1.9 bln U.S.

    By Dominic Lau
    TOKYO, April 25 (Reuters) - Japan's Nikkei share average
edged higher to a near five-year high on Thursday, but the mood
was tempered by sharp losses for Canon Inc and Nintendo
Co Ltd as they failed to meet investors' lofty
expectations of strong earnings guidance.
    Market analysts had expected long suffering Japanese
companies will aggressively raise their earnings guidance for
the financial year after the yen has weakened more than 14
percent this year, driven by bold government and the central
policies to revive growth. 
    Canon Inc sank 5 percent, retreating from a
one-year high, after the camera-and-printer maker lifted its
annual operating profit forecast by nearly 10 percent to 450
billion yen ($4.5 billion), but below a market consensus of 510
billion yen.
    It was the second top-weighted loser and the fourth-most
traded stock on the main board by turnover.
    Rival Nikon Corp eased 1.5 percent.
    The Nikkei added 0.2 percent to 13,869.92 after
trading as high as 13,906.76, its highest level in nearly five
years, helped by a weak yen and gains for some exporters. The
index jumped 2.3 percent on Wednesday.
    A sales trader at a Japanese brokerage house said the
selling was linked to earnings, but added that it was a short
term phenomenon.
    "On a longer term basis, the conclusion is that yen FX
weakness is helping," he said.
    Gains in Toyota Motor Corp, Honda Motor Co
, TDK Corp and Suzuki Motor Corp 
helped underpin the Nikkei. They were up between 1 and 3.3
    The benchmark Nikkei has rallied 60 percent since
mid-November, when Shinzo Abe, who became prime minister in
December, promised expansionary monetary and fiscal policies to
revive the world's third-largest economy. 
    Nintendo Co Ltd also suffered, down 5.5 percent
despite the maker of home video games lifting its forecast for 
an operating profit of 100 billion yen after two years of
    The broader Topix index gained 0.5 percent to
    Shiseido Co Ltd was the fifth top-weighted loser in
the Nikkei, down 3.4 percent after the cosmetic company forecast
its first net loss in eight years after saying it would write
down the $1.9 billion acquisition of U.S. Bare Escentuals due to
disappointing sales.        
    Investors remained upbeat on the outlook for Japanese
stocks, although government data showed foreign investors were
net sellers of Japanese equities last week, with a net outflow
of 27.9 billion yen after they bought 1.57 trillion yen of
equities in the previous week.
    "Dollar strength is a headwind for emerging markets equities
and we would use a bounce to reduce exposure further. Japan is
our favourite equity market," Trevor Greetham, director of asset
allocation at Fidelity Worldwide Investment, wrote in a note.
    "Japan benefits from dollar strength and it has very
positive domestic policy settings from an equity investors'
point of view."
    In terms of valuations, Japanese equities carry a 12-month
forward price-to-earnings ratio of 14.9, a level not seen since
June 2010 but is still below its 10-year average of 16.3,
according to Thomson Reuters Datastream.
    ($1 = 99.3750 Japanese yen)

 (Editing by Shri Navaratnam)

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