August 5, 2013 / 2:17 AM / in 4 years

Nikkei slips as stronger yen hits exporters; Toyota down after earnings

* Nikkei drops 1.3 pct, Topix down 1.1 pct
    * Firmer yen triggers profit-taking in exporters, financials
    * Toyota earnings fail to set market tone

    By Tomo Uetake
    TOKYO, Aug 5 (Reuters) - Japan's Nikkei share average fell
on Monday morning as the yen's strength against the dollar
prompted investors to lock-in profits after recent strong gains,
with exporters particularly hard hit.
    The benchmark Nikkei, which rose 5.8 percent over
the past two sessions, dropped 1.3 percent to 14,278.94 in
mid-morning trade.
    "The Nikkei rallied on the back of a weak yen last week. So
it's not a surprise to see some profit taking here as the yen
strengthened (against the dollar)," said Masayuki Doshida,
senior market analyst at Rakuten Securities. "Still, I think the
market is holding up pretty well."
    A strong yen undermines Japanese exporters' competitiveness
abroad and hurts profits when repatriated.
    Toyota Motor Corp, which reported its earnings
after the market close on Friday, fell 0.6 percent in very
choppy trade. It advanced as much as 1.1 percent in the opening
session and was the most traded stock by turnover on the main
board.
    "Although many investors had expected Toyota's earnings
report to set the tone for market direction, that hasn't
happened. The results have attracted mixed reactions from
analysts," said Doshida.
    The world's best-selling carmaker took a cautious stance on
its profit outlook, worried over currency moves and a slowdown
in Thailand and other emerging markets, even as healthy earnings
on overseas sales lifted it to a near-record quarterly profit.
 
    As the dollar's retreat against the yen weighed on market
sentiment, many exporters succumbed to selling pressure, with
Mazda Motor Corp falling 3.6 percent and Tokyo Electron
Ltd down 2.8 percent. 
    The greenback fell to a low of 98.66 yen after the 
U.S. jobs data was seen making the U.S. Federal Reserve more
cautious about drawing down its huge economic stimulus
programme. The pair last traded at 98.99 yen, according to EBS
data.
    U.S. employers added 162,000 jobs in July, which was below
the median forecast in a Reuters poll of 184,000. 
 
    The broader Topix fell 1.1 percent to 1,182.75, with
all of its 33 subsectors in negative territory.
    Other notable movers include Tokyo Tomin Bank and
Yachiyo Bank Ltd, which jumped 9.6 percent and 13.5
percent respectively, after the Nikkei business daily reported
the two regional banks have begun talks towards integrating
operations around the fall of 2014.
    Market players said that investors also remained focused on 
corporate earnings. On Tuesday, Nippon Telegraph and Telephone
Corp (NTT) is will report earnings after the market
close.
    The Nikkei is up around 38 percent this year, underpinned by
the Japanese government's sweeping stimulus policies aimed at
pulling the world's third-largest economy out of its two-decade
long slumber.

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