Roundup: Nikkei drops 1.05 pct. on last day of fiscal year as profit-taking weighs

The Nikkei stock index closed lower on the last fiscal day of the year Tuesday, dropping 1.05 percent, as investors looked to cash in on gains before the end of the fiscal year and took a back seat to see how corporate earnings shape up here.

The Nikkei 225 index dropped 204.41 points to finish at 19,206. 99, while the broader Topix index of all first-section shares declined 0.94 percent, or 14.66 points, to end at 1,543.11.

Local traders said that profit-taking was pervasive as investors looked to secure gains made on the market's run recently which saw a string of 15-year closing highs on the back of a weak yen and hopes for the economy following companies' wage hikes and robust earnings ahead from corporate Japan.

The Index itself expanded 30 percent in the fiscal year, in part due to some of the government's stimulus programs and the continued high valuation of Japanese stocks. The Nikkei increased 2.2 percent in March to log its third successive month of gains.

It was no surprise, therefore, that investors were looking for profits, traders here said, and would then be hitting the sidelines to assess corporate Japan's upcoming earnings, and, in the shorter term, news from the Bank of Japan on Wednesday about business sentiment and key jobs data due out from the U.S. on Friday. "There's quite a bit of profit-taking going on while prices are still high,"said Yutaka Miura, a senior technical analyst at Mizuho Securities Co.

Regarding the beginning of the new fiscal year, strategists concurred that all eyes would be on Japan Inc. and hopes for high yielding payouts on strong performing companies'stocks. "We're now entering a phase where investors will be watching full-year earnings very closely to see if companies can really meet expectations of higher dividends, share buybacks, and better governance. If companies meet those expectations this rally will keep going, but if they can't we're headed lower,"said Koichi Kurose, chief market strategist at Resona Bank Ltd.

Despite a comparatively weak yen, exporters lost ground Tuesday, with consumer electronics giant Sony retreating 0.6 percent to close at 3,190 yen, while Honda Motor skidded down 2.3 percent to end the day at 3,903 yen.

Clothing retailer Shimamura plunged 7.1 percent to 11,120 yen, following the firm reporting it had missed its profit forecast by 5 billion yen in the year through Feb. 20, although projected earnings for this fiscal year that were ahead of analysts' estimates.

Among financial issues, megabank Mitsubishi UFJ dropped 1.7 percent to 744 yen and Aozora Bank Ltd. slumped 3.6 percent to 426 yen, following Mitsubishi UFJ Morgan Stanley Securities Co. lowering its rating on the stock from"neutral"to"underweight."

But while Nikkei heavyweight Fast Retailing, operator of the Uniqlo chain of apparel stores lost 2 percent to close at 46,495 yen, China-linked issues rallied following the People's Bank of China lowering minimum down payments on second homes to 40 percent from 60-70 percent to stimulate the property market.

As such, Toto Ltd. leapt 4.6 percent to 1,785 yen., while Nihon Flush Co. jumped 4.3 percent to close the day at 1,666 yen.

Fujifilm Holdings was also in the spotlight Tuesday, advancing 1.5 percent to 4,276.50 yen, following the firm announcing plans to acquire Cellular Dynamics International Inc., a U.S. manufacturer of human cells, for around 307 million U.S. dollars.

Trading volume on Tuesday rose to 2.36 billion shares on the Tokyo Exchange's First Section, up from Monday's volume of 2.10 billion shares, with declining issues beating advancing ones by 910 to 836. Endi