(Adds weekly move, details)
By Aiko Hayashi
TOKYO, Feb 8 (Reuters) - Japan’s Nikkei stock average fell 1.4 percent on Friday, extending losses as investors sold machinery stocks such as Fanuc Ltd (6954.T) on weak industry data and a halt in TOPIX futures trade limited the ability to hedge.
Soichiro Monji, a chief strategist of the equity management department at Daiwa SB Investments, said disappointing earnings results from Toray Industries Inc (3402.T) and the system glitch sparked further selling in the afternoon session.
Traders said they were also wary of holding stocks over the three-day weekend, especially in view of recent volatility on Wall Street. Japanese financial markets are closed on Monday for a public holiday.
“The main underlying reasons for the falls are still worries about the health of the economy and corporate earnings,” Monji said.
“Investors likely decided to sell off stocks again as Japanese corporate earnings are bad, even compared with those of American companies.”
Yosuke Shimizu, general manager of the investment information department at online broker Monex Inc., said the system glitch was a big problem, especially just before the three-day weekend.
“Because it means those who want to hedge by selling ahead of the weekend have lost one means to do that and they are desperate to hedge in other ways,” he said. “That in turn triggers more selling.”
The Tokyo Stock Exchange halted trade in March 2008 TOPIX futures JTIc1 because of a system glitch and said, during the midday break, that trade would remain suspended for the rest of the session. Futures contracts are often used by investors to hedge their positions.
The Tokyo bourse said later it was still not sure if it could resume trade at the beginning of next week. [ID:nT267255]
The benchmark Nikkei average .N225 ended down 189.91 points at 13,017.24.
For the week the Nikkei lost 3.6 percent and it has yet to post a weekly rise since the start of the year. It is down 15 percent so far this year.
The broader TOPIX index .TOPX declined 1.4 percent or 17.94 points to 1,287.14.
Machinery stocks fell after government data showed core private-sector machinery orders, a highly volatile series regarded as an indicator of capital spending in the coming six to nine months, fell a bigger-than-expected 3.2 percent in December from the previous month. [ID:nT207019]
Industrial robot maker Fanuc fell 4 percent to 8,920 yen, while construction machinery maker Komatsu Ltd (6301.T) skidded 6.8 percent to 2,275 yen and machine tool maker Okuma Corp (6103.T) tumbled 10.6 percent to 820 yen.
“The machinery data is unlikely to be a big sell-off factor, though recently the market tends to react sharply to any negative news,” said Masaru Hamasaki, a senior strategist at Toyota Asset Management.
Toray, which makes optical films and other materials used in the production of LCD and plasma TVs, joined a line of companies lowering earnings forecasts such as Sony Corp (6758.T) and financial group Orix (8591.T).
Shares of Toray fell 4.5 percent to 621 yen after the company cut its profit forecasts during afternoon trade, citing a stronger yen, high raw materials and fuel prices, and price competition in the flat panel display market.
On the other hand, companies reporting solid earnings were in favour, providing some support.
Japan Tobacco Inc (2914.T) climbed 3.4 percent to 604,000 yen after it revised up its full-year operating profit forecast, citing the expansion of its overseas cigarette business and the inclusion of earnings from a frozen food firm it acquired.
Softbank Corp (9984.T) added 1.4 percent to 2,160 yen after the telecoms and Internet firm said on Thursday its quarterly operating profit rose 9.1 percent from the previous year to 92.4 billion yen ($860 million). [ID:nT218539]
Trade was moderate on the Tokyo exchange’s first section, with 2.4 billion shares changing hands, compared with last week’s daily average of 2.2 billion.
Declining shares beat advancing ones by a ratio of nearly two to one. (Additional reporting by Taiga Uranaka; Editing by Chris Gallagher)