July 17 11:47 pm ET -- Nikkei below 12,000 at midday led by DoCoMo, chips -->
(UPDATE: Updates midday with volume, more stocks, details)
TOKYO, July 18 (Reuters) - Tokyo's key Nikkei average fell below the 12,000 mark for the first time since mid-March, ending Wednesday morning trade in the
doldrums after a slide by U.S. chip giant Intel (NasdaqNM:INTC - news) triggered losses in high-tech shares.
``Investors here originally expected Intel's results would give the market a lift after weighing it down with a bearish pre-announcement, just like what it did in the
past,'' said Masatoshi Sato, senior strategist at Mizuho Investors Securities.
``Maybe expectations were too strong.''
Dominant mobile phone operator NTT DoCoMo Inc , Japan's largest issue by market capitalisation, came under heavy pressure amid growing concerns over its
profit outlook and plans for overseas expansion and new services.
The benchmark Nikkei average ended the morning down 1.45 percent at 11,952.77, breaking the 12,000 threshold for the first time since March 15, while the
capital-weighted TOPIX index (^TOPX - news) fell 1.48 percent to 1,205.84.
The Nikkei is now down 17.9 percent from its year-to-date intraday high marked on May 7.
CHIPS FOLLOW INTEL
Among major chip issues, Fujitsu Ltd fell 4.27 percent to 1,167 yen and NEC Corp lost 2.75 percent to 1,554 yen, following slides in Intel shares in after-hours
trade.
Intel Corp shares last traded at $29.40 on the Instinet electronic brokerage system, down from a regular close of $29.90.
Intel, the world's largest semiconductor maker, posted a 76 percent drop in quarterly profits -- a surprise for analysts who were, on average, expecting worse
results.
But the company's outlook gave investors little reason to be optimistic. Intel forecast third-quarter sales of $6.2 billion to $6.8 billion, compared with $6.3 billion in
the second quarter.
``On the surface, the report from Intel was neutral but it wasn't taken as neutral in after-hours. Tokyo investors had no choice but to issue a round of sell orders in
the chips on that reaction,'' said Tatsuyuki Kawasaki, director of equities at Kaneyama Securities.
Other major high-tech stocks followed chip shares lower, with electronics giant Sony Corp down 2.61 percent to 7,080 yen and Matsushita Communication
Industrial Co Ltd , Japan's top cellphone maker, dipping 4.87 percent to 4,490 yen, its lowest level since October 1998.
Besides concerns about U.S. high-tech earnings, traders said Wednesday's slide was also due to a bleak outlook for Japan's economy and a dearth of fresh policy
measures from Prime Minister Junichiro Koizumi's government.
``We still don't have clear picture of the planned structural reforms and little progress has been made in reforms in the securities-related tax system. There are no
convincing domestic incentives to lure investors to stock trading,'' said Hiroichi Nishi, a general manager at Nikko Securities.
Trade was subdued with 269.50 million shares changing hands on the first section of the Tokyo Stock Exchange, up slightly from 250.94 million shares on Tuesday
morning. Decliners outnumbered gainers 817 to 399 on the first section.
DOCOMO TUMBLES
NTT DoCoMo fell 7.18 percent to 1.81 million yen, flirting with a year-to-date low of 1.80 million notched on March 5.
The Asian Wall Street Journal said on Tuesday the carrier would delay the launch of its popular ``i-mode'' mobile Internet services in Europe because of technical
problems at local operators.
The postponement would be the latest in a string of delays and glitches for DoCoMo as it prepares to spread its wings beyond Japan on the strength of its wildly
successful ``i-mode'' service.
Snow Brand Milk Products Co Ltd fell 2.65 percent to 368 yen after Japan's largest milk products maker said it would recall 16,242 boxes of popsicles that had
been tainted with calcium chloride.
Snow Brand shares fell as low as 366 yen earlier in the session, a year-to-date low.
With a dearth of supportive factors on the horizon in terms of earnings or macroeconomics, the Nikkei may well test a 16-year closing low of 11,819.70 hit on
March 13 later this week or next week, traders said. |
