Tokyo stocks may face further profit taking

Japanese share prices may face further profit-taking amid jitters about the outlook for corporate earnings and the US economy, analysts said on Friday. Over-all sentiment continues to improve amid hopes that the US economy could begin to recover later this year.
But dealers said the Tokyo market looks due for a breather after the benchmark Nikkei index hit a near four-month high this week. "Market sentiment is recovering as players feel that fears about the financial turmoil that had stalked world markets until late March are gradually fading," said Mizuho Investors Securities strategist Masatoshi Sato.
"We expect many economic reports next week ... but I think investors will tend to go for profit-taking," he said, predicting a trading range for the Nikkei of 13,400-14,000 points next week. The benchmark Nikkei-225 ended Friday at 13,655.34, down 393.92 points or 2.80 percent from a week earlier. Japanese financial markets were closed on Monday and Tuesday for national holidays.
The index struck 14,102.48 points on Wednesday, the best finish since January 11, before investors moved to lock in gains.
The broader Topix index of all first-section shares lost 35.63 points or 2.59 percent over the week to 1,341.76. Next week Japan's government will release March machinery orders - seen as a key barometer of business investment - on Thursday, followed by a first-quarter growth estimate for Asia's largest economy on Friday.
Another raft of corporate earnings is also due from major companies including Nissan Motor Co on Tuesday and Sony Corp on Wednesday, as well as top banks.
Investors are nervous about the risk that Japan's financial institutions will reveal ballooning losses from securities backed by US subprime, or risky, mortgages amid a housing slump and credit crunch in the United States.
They are also jittery about the outlook for automakers and other exporters after Toyota Motor Corp forecast a sharp drop in earnings this year, sending its shares sharply lower on Friday and weighing on the overall market.
Against this background it could be hard for shares to post further gains next week, said Motoki Ichikawa, head of research at SMBC Friend Securities.
"I think market players feel share prices hit a ceiling for now when they reached 14,000 this week. Investors may go for profit-taking next week," he said.