The Nikkei average edged up 0.1 percent on Monday as investors picked up recently battered trading companies such as Mitsui & Co Ltd, but the market's gains were held in check by a sharp fall in Advantest Corp after its dismal results.
Honda Motor Co Ltd shares were also hit hard after the automaker cut its annual profit and global car sales forecasts as it battles with rising costs for raw materials and a crumbling US auto market. In a trade-thin session, the market erased much of earlier gains as investors remained cautious before more earnings reports due in both the United States and Japan and a raft of important economic data.
"Those who bought stocks this morning turned around and saw nobody following them, and they closed their positions to lock in profits," said Fumiyuki Nakanishi, group manager of the investment information department at SMBC Friend Securities.
"Investors don't want to get deeper into buying ahead of the jobs data and ISM this weekend," he said, referring to the US payrolls report for July and the Institute for Supply Management's July reading on US manufacturing, both due on Friday.
The benchmark Nikkei ended up 19.02 points at 13,353.78, after rising as high as 13,468.94. The broader Topix rose 0.2 percent to 1,300.79. "The market's attention has shifted to corporate earnings and macro data from credit crisis," said Tomomi Yamashita, fund manager at Shinkin Asset Management.
"But right now, investors are moved by micro factors. The overall market does not start moving up unless investors start buying on macro factors." The market rose in the morning as a softer yen and easing fears about the US economy helped boost investor confidence, sparking short-covering in trading firms like Mitsui.
Mitsui rose 5.7 percent to 2,230 yen and rival Mitsubishi Corp gained 2.6 percent to 3,140 yen. A recent fall in oil prices had put selling pressure on these trading houses, which have stakes in overseas oil fields.
But the gains were pared by sharp falls in firms that have reported disappointing results. Chip-tester maker Advantest, which posted a quarterly loss on slumping sales and orders, slid 6.1 percent to 2,170 yen, and Honda fell 2.9 percent to 3,650 yen. Both were among the top drags on the Nikkei.
FAST RETAILING UP Fast Retailing Co Ltd jumped 5.5 percent to 11,860 yen, the highest price since April 2006. Fast Retailing, which operates the Uniqlo casual clothing chain, has reported solid sales growth despite a poor overall retail environment. "The firm is among the winners in the retail sector," said Nakanishi of SMBC Friend Securities.
NGK Insulators Ltd dropped 7.1 percent to 1,749 yen after the Nikkei business daily reported the firm was planning to cut output of diesel particulate filters by 30-50 percent due to a slowdown in sales of large vehicles in North America. A company spokesman said the firm is planning a cut in its domestic DPF production but added its scale and timing were undecided.
Yahoo Japan rose 4.3 percent to 41,700 yen after the Internet company said it would cancel 2.01 percent of its outstanding shares, or 1.22 million shares, on August 8. The firm also reported its operating profit rose 10.9 percent to 32.9 billion yen for the three months ended in June, which was within its own estimate range. Trade slowed on the Tokyo exchange's first section, with 1.6 billion shares changing hands, compared with last week's daily average of 1.9 billion.
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