Nikkei ends flat

Japan's Nikkei average finished almost flat on Monday after hitting its lowest in nearly four months as a stronger yen weighed on Canon Inc and other exporters, while steel shares such as JFE Holdings Inc supported the market on robust profitability.
The market largely brushed aside the defeat of Prime Minister Shinzo Abe's ruling camp in Sunday's upper house elections, although political uncertainties still remain. Investors picked up a series of stocks with solid earnings results such as Fanuc Ltd, providing support to the market.
Katsuhiko Kodama, senior strategist at Toyo Securities, said investors' eyes have now turned to corporate earnings, Wall Street and the yen as the market seems to have largely factored in the ruling party's defeat in the elections.
"Investors here are very wary about the New York market, and if it further extends losses, the Nikkei might have a hard time defending the 17,000 level," he said. The Nikkei added 0.03 percent, or 5.49 points, to end at 17,289.30 after logging its lowest level since April 2.
The broader TOPIX index rose 6 points to 1,705.71. Tokyo saw active trade with 2.3 billion shares changing hands, in line with average daily volume in June. Advancers beat decliners by a ratio of more than two to one. Kathy Matsui, chief equity strategist at Goldman Sachs in Tokyo, wrote in a note to clients that the negative impact from Sunday's poll may be limited as a poor election outcome had been widely anticipated and the outlook for economic and profit fundamentals remains favourable.
"While political uncertainty and overseas credit-related concerns could result in further market weakness in the short term, we would view any further correction as an opportunity to invest in companies that our analysts rate Buy and which have positive revision momentum...," she said, listing companies such as Hitachi Construction Machinery
Exporters lost ground as the yen hit a three-month high against the euro in early trade on Monday. Canon, which generates about three-quarters of its sales overseas, dropped 2.6 percent to 6,340 yen and Sony Corp slipped 1.1 percent to 6,350 yen. Nippon Steel Corp and JFE, the world's No 2 and No 4 steelmakers, reported strong quarterly gains in profit on Monday on higher prices, and JFE raised its full-year forecast by 4 percent.
Shares of JFE jumped 5 percent to 8,350 yen after the solid results while shares of Nippon Steel, which left its annual forecast unchanged, gained a less impressive 3.9 percent to 918 yen.
Nagayuki Yamagishi, strategist at Mitsubishi UFJ Securities Co Ltd, said the upward revision by JFE was unexpected. "Normally, we don't see full-year upward revisions at this time of the year, but the fact that they did it makes me think that their earnings must be really good and force them to upgrade," he said.
Fanuc, a leading maker of industrial robots, climbed 1.7 percent to 12,870 yen after reporting solid first-quarter results on Friday, boosted by increasing capital investment world-wide. Elsewhere, shares of Mitsubishi Electric Corp surged 9.9 percent to 1,266 yen after the company reported a 63 percent rise in quarterly profit, helped by strong sales of elevators, and raised its first-half forecast.
NTT DoCoMo Inc, Japan's largest mobile phone operator, lost 2.4 percent to 166,000 yen after reporting a profit decline for the April-June first quarter of the business year.
After the closing bell, troubled chip maker NEC Electronics Corp reported a smaller quarterly loss on cost cuts, asset sales and better sales of microchips for game consoles, cars and large displays, and kept its full-year outlook. Sanyo Electric Co Ltd lowered its forecast for mobile phone sales to about 11 million units from an original estimate of 12.5 million to 12.6 million units for the business year to March 31, 2008.