Roundup: Nikkei closes 0.21 pct lower as yen's rise sparks profit-taking

The Nikkei stock index closed 0.21 percent lower Tuesday as a weak lead from Wall Street overnight, coupled with a comparatively strong yen due to eased concerns in the U.S. about the Federal Reserve's plans to hike its interest rate, saw investors take profits rather than chase issues higher.

The Nikkei 225 index lost 40.91 points to close the day at 19, 713.45, while the broader Topix index of all first-section shares closed down 0.29 percent, or 4.66 points, to finish at 1,587.59.

Local traders said that Federal Reserve Vice Chairman Stanley Fischer saying that its interest rate increase, while not coming at an early juncture as had initially been feared by global markets, may be warranted towards the end of the year and even then may rise more slowly than expected.

The news sent the U.S. dollar lower versus some of its major counterparts and was seen to be changing hands at 119.60 yen in Tokyo, compared to 119.71 yen in New York and well down from the 119.91 yen level logged in Tokyo during early trade.

A strong yen hurts exporters' profit outlooks and makes them less competitive in overseas markets. Also unfavorable exchange rates dents exporters' balance sheets when profits are repatriated from overseas when the yen rises against the U.S. dollar.

"The Fed has tolerated a stronger dollar over the past year and this has allowed Japan and Europe to promote weakness in their currencies, but that trend may be changing. It might be hard to continue believing that the yen will continue to structurally weaken against the dollar," said Tetsuo Seshimo, a portfolio manager at Saison Asset Management Co..

MBC Friend Securities' Toshihiko Matsuno largely concurred, stating that the policy may be good for the U.S. market, but not necessarily for stocks here.

"Maintaining easy monetary policy for a longer time is pretty good news for U.S. stocks, but as it results in a stronger yen per dollar, it is not exactly great for Japanese stocks," he said.

In share trading, automakers closed lower, pressured by the yen 's strength, with Honda reversing 1 percent to 4,095 yen, while Nissan Motor Co. skidded down 0.7 percent to finish at 1,267 yen.

Mobile carrier SoftBank lost 0.61 percent to 7,017 yen, while Seiko Epson retreated 2 percent to 4,695 yen, following JPMorgan Chase cutting its price target on the firm's stock by 37 percent to 5,100 yen and lowering its rating to "overweight" from "neutral. "

Battery maker GS Yuasa slumped 3.1 percent to 568 yen, following the firm slashing its net-income forecast for the year ending March by 23 percent to 10 billion yen, owing to falling profits at a lithium plant and poor sales of lithium-ion batteries for automobiles.

Rolling stock manufacturer Nippon Sharyo was another notable loser Tuesday, dropping 5.9 percent to 353 yen, after the firm said its group net loss for the year to March would likely be more than initially expected and as such a planned dividend payment was scrapped.

But electronic equipment maker Furukawa marked a particularly bright spot on the market, leaping 6.8 percent to 219 yen, after it announced that it expected its net profit had doubled.

Drug maker Eisai continued to be in the spotlight Tuesday, surging 9.4 percent to 9,570 yen, following the initial phase of its partner firm Biogen Idec Inc.'s tests on treating Alzheimer's disease showing some positive results.

Trading volume on Tuesday rose to 2.09 billion shares on the Tokyo Exchange's First Section, down from Monday's volume of 1.88 billion shares, with declining issues outnumbering advancing ones by 1,005 to 719. Endi