Nikkei average slides

Japan's Nikkei average fell 1.6 percent on Friday as mobile phone operator KDDI sank on disappointing earnings, while steelmaker JFE Holdings lost ground after not issuing an annual earnings forecast. Auto shares dropped on news that US automaker Chrysler was readying a bankruptcy plan although it was still keen to forge a deal with Italy's Fiat with one week to go before its government-imposed deadline.
"If Chrysler were to really go bankrupt, that would increase fears about a GM bankruptcy," said Fumiyuki Nakanishi, managger at SMBC Friend Securities. "The economic outlook in the United States is also still poor, as can be seen with dismal existing homes sales data." US government data showed existing homes sales fell in March to a much lower-than-expected annual rate, while weekly initial jobless claims rose slightly more than expected.
But Mizuho Financial Group and other major banks gained after better-than-expected results for a handful of US regional banks, despite Mizuho's warning that it would fall to an annual net loss of $5.9 billion. Analysts said that in addition to positive sentiment carried over from US trade and the view that the worst of Mizuho's woes were behind it, the sector was simply ripe for short-covering.
Mizuho had lost 11 percent between April 9 and Thursday while Sumitomo Mitsui had fallen 17 percent over the same period. The benchmark Nikkei shed 139.02 points to 8,707.99. On the week it shed 2.2 percent. The broader Topix slipped 1.1 percent to 830.05. Most in the market said the Nikkei was likely to move in a tight range over the next week or so, solidly supported but with investors skittish before the results of US bank "stress tests".
Those results are due out on May 4, but US regulators begin discussing their findings with the banks on Friday and US officials will outline publicly the process they followed. After the close, Nomura Holdings Inc, Japan's biggest brokerage, posted a fifth straight quarterly net loss, hit by costs related to its acquisition of parts of failed investment bank Lehman Brothers.
"Considering how hard it is to read the economic climate, these results by themselves don't make me want to go out and buy steel shares." JFE slid 3.1 percent to 2,825 yen, extending losses after Goldman Sachs downgraded ratings on it and Nippon Steel to "sell" from "neutral", saying further upside in their stock prices appears to be limited after sharp gains.
JFE did not provide a profit forecast for this business year, saying new term contract agreements on the price of iron ore, a key raw material used in steelmaking, have yet to be set. For the January-March quarter, JFE reported an 83 percent slide in profit, hit by a double whammy of crumbling global steel demand and a stronger yen hurting its exports.
Nippon Steel dropped 4.2 percent to 340 yen. Among the biggest drags on the Nikkei 225 was KDDI, Japan's second-biggest wireless carrier, which sank 5.2 percent to 440,000 yen.
KDDI forecast only a 6 percent rise in operating profit to 470 billion yen ($4.8 billion) for the year to March, citing a decline in sales expenses, below the average 478.5 billion yen profit projected by eight brokerages polled by Reuters. Honda Motor Co slid 2.9 percent to 2,680 yen and Nissan Motor Co skidded 4.8 percent to 494 yen. Toyota Motor Corp fell 2.1 percent to 3,810 yen.
Among gainers, Mizuho gained 3.7 percent to 199 yen and Sumitomo Mitsui Financial Group jumped 4.6 percent to 3,090 yen. The banking subindex rose 1.4 percent, one of the top gainers among the subindexes. Trade was active on the Tokyo exchange's first section, with 2.7 billion shares changing hands, compared with last week's daily average of 2.6 billion. Declining stocks outnumbered advancing ones by nearly 3 to 1.