Nikkei retreats on pause in weak yen trend; financials extend outperformance

  • Reuters
  • Stock Market News
Nikkei retreats on pause in weak yen trend; financials extend outperformance
Credit: © Reuters.

* As of Feb 10, cos' pretax profit rose 9 pct on year - Mizuho

* Exporters lose ground

By Ayai Tomisawa

TOKYO, Feb 16 (Reuters) - Japanese stocks retreated on Thursday morning as a pause in the weakening of the yen gave investors an excuse to book profits, though financials extended their outperformance on rising U.S. yields.

The Nikkei share average .N225 fell 0.7 percent to 19,310.02 in midmorning trade after scaling near six-week highs earlier this week.

Exporters lost ground as the dollar took a breather after rallying in the wake of upbeat U.S. economic data, which had briefly set off market talk of a possible rate hike by the U.S. Federal Reserve at next month's meeting.

Toyota Motor Corp 7203.T dropped 0.9 percent, Tokyo Electron Ltd 8035.T tumbled 2.7 percent and Daikin Industries Ltd 6367.T

At 0405 GMT, the dollar was down 0.3 percent at 113.84 yen JPY= .

"After the market rose recently, a correction is natural, but the mid-term outlook isn't bad thanks to strong earnings results," said Nobuhiko Kuramochi, a strategist at Mizuho Securities.

As of Feb. 10, 1,175 companies excluding financials which reported their third-quarter earnings posted an average of 9 percent rise in its pre-tax profit on the year, according to Mizuho Securities. For the full year ending March, the companies expect a 5.5 percent fall in their pre-tax profits, compared to a previously forecast 8.7 percent fall, Mizuho said.

Financial stocks bucked the weakness and tracked their U.S. peers after benchmark Treasury yields rose to 2-1/2-week highs on Wednesday, helped along by data showing accelerating U.S. inflation last month. UFJ Financial Group 8306.T rose 0.2 percent and Sumitomo Mitsui Financial Group 8316.T gained 0.1 percent. Tokio Marine 8766.T added 1.1 percent while Sompo Holdings 8630.T advanced 0.6 percent.

The broader Topix .TOPX dropped 0.5 percent to 1,546.43 and the JPX-Nikkei Index 400 .JPXNK400 shed 0.5 percent to 13,871.98.

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