Nikkei falls on weak financials but steel shares hit 5-month high

  • Reuters
  • Stock Market News
Nikkei falls on weak financials but steel shares hit 5-month high
Credit: © Reuters.

* GS Yuasa soars on report its new battery to double EV range

* Seasonal slowdown in August pressures market - analyst

* Steel sector hits 5-month high

By Ayai Tomisawa

TOKYO, Aug 8 (Reuters) - Japan's Nikkei share average slid on Tuesday, with weak financials offsetting gains in the steel sector which rose on a strong earnings outlook.

The Nikkei .N225 dropped 0.2 percent to 20,012.59 by midmorning trade, after opening slightly higher. The broader Topix .TOPX shed 0.3 percent to 1,635.14.

Japan Steel Works 5631.T jumped 19 percent after the company raised its operating profit outlook to 14 billion yen from 12.5 billion yen for the year ending March 2018 thanks to costs improvement in its industrial machine business.

The iron & steel sector .ISTEL.T rose 0.6 percent to five-month highs.

The sector has been enjoying strong gains thanks to upbeat full-year outlooks from Japanese steelmakers. The companies are passing higher raw materials costs on to customers by raising product prices, betting on solid demand at home and abroad. have preferred certain sectors with strong results such as construction and steel to cyclical stocks like automakers," said Nobuhiko Kuramochi, a strategist at Mizuho Securities.

But he added: "The Japanese market is sluggish as the dollar-yen is not giving a direction, while there is a seasonal slowdown in activity in August."

Insurers and banks, which invest in higher-yielding products such as foreign bonds, were weaker after U.S. treasury yields slipped overnight.

MS&AD Insurance 8725.T fell 0.9 percent and T&D Holdings 8795.T dropped 1.3 percent. Mitsubishi UFJ Financial Group 8306.T and Sumitomo Mitsui Financial Group 8316.T both declined 0.6 percent.

Bucking the weakness, GS Yuasa Corp 6674.T jumped 15 percent after the Nikkei business daily reported that the company will begin mass-producing as early as in 2020 a new lithium-ion battery that would double the range of electric vehicles while keeping prices steady. related to electric vehicles is of strong interest to investors now," said Yoshihiro Okumura, general manager at Chibagin Asset Management.

"As companies prepare for the shift (towards EVs in Europe), investors are also looking to spot the right stocks. They don't want to fall behind." (Editing by Kim Coghill)

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