Japan's Nikkei average lost 1.5 percent on Friday, hit by a disappointing profit outlook from Sony Corp but the benchmark came off the day's lows as the yen weakened. Shinsei Bank fell 4.5 percent after it cancelled a planned merger with Aozora Bank and posted a second straight year of losses, prompting Japan's banking minister to call for strong government guidance.
Sony's outlook fell far short of consensus expectations, sending the stock down nearly 7 percent and weighing heavily on the electronics sector. "There's a strong sense of disappointment that the company's full recovery scenario remains unclear, though market expectations could have been too high and its TV business in emerging countries appears to be on a recovery track," said Tsuyoshi Segawa, an equity strategist at Mizuho Securities. Worries about a stronger yen and a fall on Wall Street had also prompted profit-taking in morning trade after the Nikkei rose more than 2 percent the previous day, but market players said many of these concerns eased as the day went on.
The benchmark Nikkei shed 158.04 points to 10,462.51. At one stage it had fallen 2.2 percent. For the week, it rose 0.9 percent but is down 0.8 percent on the year to date.
The broader Topix lost 1.2 percent to 936.45. Market players said they thought support levels were likely to gradually rise over the next few weeks since the Nikkei held onto gains above its 200-day moving average just above 10,300 after falling below it last week.
Shares pared losses in afternoon trade as the dollar rose 0.1 percent against the yen to 92.82 yen and the euro rose 0.5 percent to 116.50 yen. Sony tumbled 6.8 percent to 2,950 yen after it forecast an annual operating profit of 160 billion yen ($1.7 billion), up fivefold from a year earlier, but short of a 209 billion yen consensus. Konica Minolta fell 3.9 percent to 1,070 yen after the company forecast an annual operating profit below consensus.
Alps Electric surged 11.8 percent to 808 yen, extending gains made the previous day, after Mitsubishi UFJ Morgan Stanley Securities hiked their rating on the company two notches, to "2" from "4," citing consensus-beating earnings announced on Wednesday and the positive impact of cost cutting.
Shinsei shares lost 5 yen to 106 yen. Aozora, whose shares were down 5 percent, also said it may consider entering into a new business alliance with Shinsei. Trade was moderate, with 2.6 billion shares changing hands on the Tokyo exchange's first section, down from the four-month high of 3.1 billion marked last Friday. Declining shares outnumbered advancing ones by more than 2 to 1.