RTRS: Nikkei hits three-week closing low as exporters take hit
By Elaine Lies
TOKYO (Reuters) - Japan's Nikkei stock average fell 2.3 percent on Monday to hit a three-week closing low, with exporters hit by a stronger yen and weak consumer spending data that sparked a broad Wall Street sell-off. Sony Corp (6758.T: Quote, Profile, Research, Stock Buzz) sagged nearly 6 percent as investors shrugged off the electronics maker's upward revision to its earnings forecast, instead moving to take profits.
But shares of Aiful Corp (8515.T: Quote, Profile, Research, Stock Buzz) and other Japanese consumer lenders soared after a source said the government may ease regulations that have crippled the industry and raised hurdles for small businesses seeking loans.
"While shares in Asia are down, the fact that falls were limited and the yen has actually retreated a bit against the dollar have helped keep the Nikkei from sliding further," said Kenichi Hirano at Tachibana Securities.
Tokyo analysts also said that while investors had been spooked by the bankruptcy filing of U.S. lender CIT Group (CIT.N: Quote, Profile, Research, Stock Buzz) and concerns about Citigroup's (C.N: Quote, Profile, Research, Stock Buzz) balance sheet, these were no longer a major market factor. "If, for example, there was worry the way there was when Lehman failed, there would have been much sharper falls," said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Securities.
"The CIT failure appears much more managed, much more like GM in that way. It's not at all the same thing."
CIT's bankruptcy, one of the largest in U.S. corporate history, had been widely expected for months, but it could further constrict credit and weigh on the fragile U.S. economy. Accounting expert Robert Willens said Citigroup (C.N: Quote, Profile, Research, Stock Buzz) was likely to have a $10 billion fourth-quarter charge on its deferred tax assets.
But others remained wary.
"Economic indicators are beginning to show uncertainty about the future, despite solid corporate earnings results so far," said Yutaka Miura, a senior technical analyst at Mizuho Securities.
"We have a bunch of news including CIT that is making investors nervous about the outlook for the economy as well as earnings going forward."
In thin trade, the benchmark Nikkei .N225 shed 231.79 points to 9,802.95 after earlier falling as much as 3 percent to 9,736. It was its lowest close since October 7.
The broader Topix .TOPX fell 1.6 percent to 880.54.
Japanese markets will be closed on Tuesday for a holiday.
The S&P .SPX lost 2.8 percent on Friday as the fragility of the U.S. economic recovery was highlighted by economic reports that showed U.S. consumers cut spending in September and consumer sentiment turned gloomier this month.
CONSUMER LENDERS CLIMB
The yen rose to two-week highs against the dollar around 89.20 yen in early Asian trade, but the dollar had clawed back to 90.03 yen by midafternoon. Investors fret about a stronger yen as it eats into exporters' profits when they are repatriated.
After the bell, Suzuki Motor Corp (7269.T: Quote, Profile, Research, Stock Buzz) raised its annual profit forecasts as sales soared in its main Indian market, setting it apart from other Japanese automakers that have depended heavily on the sinking U.S. market.
Suzuki closed down 2.9 percent at 2,170 yen.
Among exporters, Kyocera Corp (6971.T: Quote, Profile, Research, Stock Buzz) sank 4.5 percent to 7,400 yen and Canon Inc (7751.T: Quote, Profile, Research, Stock Buzz) lost 3.1 percent to 3,420 yen. Honda Motor Co (7267.T: Quote, Profile, Research, Stock Buzz) slid 2.1 percent to 2,820 yen.
Sony slid 5.8 percent to 2,625 yen, with analysts saying the absence of any strong positive surprises in its earnings announcement on Friday had prompted profit-taking.
"The results weren't bad at all but there wasn't much of a surprise either, and that prompted investors to sell on the fact," said Noritsugu Hirakawa, a strategist at Okasan Securities.
But Japanese consumer lender Aiful soared 17.3 percent to 156 yen, while rival Takefuji (8564.T: Quote, Profile, Research, Stock Buzz) surged 23.1 percent to 427 yen. Consumer credit firm Credit Saison Co Ltd (8253.T: Quote, Profile, Research, Stock Buzz) jumped 16.5 percent to 1,214 yen.
The government will launch a study group as early as this month to reassess lending regulations, aiming to make it easier for self-employed business owners to get loans, a government source told Reuters.
Trade was light on the Tokyo exchange's first section, with 1.8 billion shares changing hands, below last week's daily average of 2 billion.
Declining stocks outnumbered advancing ones by more than 2 to 1.
