October 25, 2010 / 7:31 AM / 9 years ago

Nikkei inches down as yen hits 15-year peak

* Earnings in full swing this week; Canon, Sony to report

* Eyes on companies’ currency assumptions, impact on f’casts

* Toyota down; media reports to cut H2 dlr/yen rate to 80 yen

By Aiko Hayashi and Chikafumi Hodo

TOKYO, Oct 25 (Reuters) - Japan’s Nikkei average fell 0.3 percent on Monday as the yen reached a fresh 15-year high on the dollar and approached an all-time peak, but investors were careful about trading actively ahead of the country’s main earnings period.

The reporting season is about to get into full swing in Japan, with a flurry of major companies set to report this week including Canon Inc (7751.T) on Wednesday and Sony Corp (6758.T) on Friday.

The yen rose as high as 80.65 JPY= against the dollar on trading platform EBS, its highest since 1995. It was up about 0.9 percent on the day, advancing closer to its postwar record high of 79.75 set in April 1995.

“The Nikkei was pressured by the yen’s rise. But the Nikkei basically moved in a very narrow range throughout the day as the market was reluctant to take new positions before earnings, as well as U.S. mid-term elections and the FOMC meeting,” said Takashi Ohba, senior strategist at Okasan Securities.

The benchmark Nikkei .N225 closed the day down 25.55 points at 9,401.16.

The broader Topix .TOPX fell 0.4 percent to 821.23.

Trade was thin on the Tokyo exchange’s first section, with 1.40 billion shares changing hands, its lowest volume in a month. Declining stocks outnumbered advancers by more than 2 to 1.

Analysts said focus was on companies’ currency assumptions for the year, and if a change in assumption rates will result in revisions to full-year earnings forecasts.

“The market here will likely be rangebound until earnings reports by blue-chip exporters this week are out of the way. Many in the market appear to think their full-year guidance figures won’t be very good,” said Hajime Nakajima, deputy general manager at Cosmo Securities.

Toyota Motor Corp (7203.T) will lower its dollar/yen rate assumption by 10 yen to 80 yen for the October-March second half of the business year, which will cut its operating profit for the period by 150 billion yen ($1.84 billion), the Yomiuri newspaper said on Monday. [ID:nTKZ006604]

Toyota closed down 1.1 percent at 2,893 yen.

The head of a Japanese steel industry body said on Monday the yen’s current rate is too high and an appropriate rate for Japanese manufacturers would be around 90 yen to the dollar. [ID:nTOE69O04P]

Still, investors were reluctant to sell Japanese shares too heavily on prospects that Japanese corporate results in general would be good, traders said.

“There is a limit to the anticipated amount of aggressive selling of Japanese as we expect earnings in general to be strong,” said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.

“A large amount of interest is on the behaviour of the yen. If the yen appreciates further the Nikkei will be put under bigger selling pressure,” Akino said.

Exporter shares were generally soft, with Canon down 1.1 percent at 3,745 yen and Sony falling 0.4 percent to 2,724 yen.

Shares of Honda Motor Co (7267.T) erased early losses to close up a slim 0.1 percent at 2,919 yen.

Honda said on Friday it was recalling 528,000 vehicles worldwide due to potential problems with a master brake cylinder seal. [ID:nN22210495]

But KDDI Corp (9433.T) surged 7.3 percent to 436,000 yen after the mobile phone operator said it would buy back up to 100 billion yen of its own shares in what could be the second-biggest share repurchase in Japan this year.

KDDI decided to launch the buyback because its stock was depressed and it had no plans for major acquisitions or any other big investments, Tadashi Onodera, who will step down as president in December, told a news conference in Tokyo. [ID:nTOE69L068] (Editing by Joseph Radford)

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