Nikkei slumps on exporters

The Nikkei dipped 0.08 percent on Friday as some exporters such as Honda Motor Co fell on concerns of a slowdown in the US economy, while expectations of a rise in Japanese interest rates also weighed on sentiment.
But losses were curbed as property stocks extended gains on hopes for rising rents, while Canon Inc and other firms judged to have bright profit outlooks rose as investors began to shift their attention to company earnings.
The Nikkei fell to as low as 14,865.57, but sentiment improved as the decline proved limited and investors stepped back in, analysts said.
"Investors bought back shares after seeing the market holding firm. It seems that investors are testing where the floor is," said Yumi Nishimura, manager at the investment advisory section at Daiwa Securities SMBC Co Ltd.
Nishimura added that as quarterly earnings draw near, investors are picking up shares that are undervalued and have profit potential. The Nikkei fell 11.65 points to 15,124.04. The TOPIX index fell 0.23 percent to 1,545.57. For the week, the Nikkei posted a modest rise of 1.64 percent. That marked the benchmark's second straight weekly gain, something it has not seen since it rose to a 5-1/2-year high in April.
Growing expectations that the Bank of Japan may raise interest rates as early as next month also weighed on the market. Michael Coates, director of equity sales at KBC Financial Products, said any such move by the BOJ would be positive in the long run. "I think in the short term it may hold us back a little bit, but for the long term all is pretty positive. If they raise rates, there have to be fairly strong signs of inflation in the economy."
Shares of automakers, heavily reliant on the US market, lost ground on concern of a slowdown in the US economy and ahead of a Federal Reserve policy-setting meeting next week. Honda Motor, which made more than 80 percent of its sales outside of Japan in the year to March 2005, fell 1.2 percent to 7,280 yen. Toyota Motor Corp, the world's most profitable automaker, gave up 1.4 percent to 5,790 yen on Mitsui Mining and Smelting Co Ltd dropped 1.8 percent to 663 yen as Shanghai copper futures fell by their daily trading limits on Friday, tracking losses in the copper price on the London Metal Exchange.
Property stocks extended gains from the previous session, with Mitsui Fudosan Co Ltd adding 3.1 percent to 2,355 yen and Mitsubishi Estate Co Ltd rising 2.2 percent.
The sector was lifted on Thursday when industry data showed that office rents in Tokyo and Osaka are expected to pick up this year for the first time in 15 years. Haruo Otsuka, chief fund manager at Toyota Asset Management, said his fund had started to pick up shares of companies that have profit growth potential.
"People find any excuses to sell stocks these days and I'm trying not to get influenced by that. Rather, I think their selling should provide a good buying opportunity," he said.
Elsewhere, Showa Denko K.K. jumped 6.3 percent to 487 yen after the company raised its full-year group recurring profit forecast by 6.5 percent to 51 billion yen ($439.4 million) thanks to higher earnings at its hard disk business.
Nikko Cordial Corp fell 3.8 percent to 1,484 yen to become the worst Nikkei 225 performer, after Japan's third-largest brokerage forecast a dividend payment of six yen for the three months to June.
Nikko paid a 50 yen dividend for the year that ended in March and the forecast raised concerns about slowing profit growth. Overall trade was slow, with just 1.55 billion shares changing hands on the Tokyo exchange's first section, compared with last year's daily average of 2.07 billion shares. Decliners beat advancers by a ratio of more than two to one.