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Nikkei down 0.7 per cent in early trade

The Nikkei loses 0.71 per cent after a fall in US stocks, while metal shares such as Sumitomo Metal Mining Co Ltd decline after a slide in metal prices.

business Updated: Jun 13, 2007 10:29 IST

The Nikkei average lost 0.71 per cent on Wednesday following a fall in US stocks, while metal shares such as Sumitomo Metal Mining Co Ltd declined after a slide in metal prices.

A sharp drop on Wall Street, in part due to a rise in bond yields to their highest in five years, stoked fears that higher borrowing costs could cut into corporate profits and choke off growth in a key market for Japanese products.

"Exporters are down following New York stocks, and profit-taking is also weighing on metal stocks after their rally," said Zenshiro Mizuno, senior managing director at Marusan Securities.

On Tuesday, nickel fell more than 6 per cent and copper shed more than 2 per cent after a slowdown in Chinese imports and a fall in global equity markets dampened sentiment.

"Investors are holding back as they are worried that higher interest rates, sparked by inflation concerns, could slow down solid economies," Mizuno said.

In Japan, the benchmark 10-year yield rose 5.5 basis points to 1.980 per cent on Wednesday, its highest level since July.

The Nikkei was down 125.39 points at 17,635.52 as of 0044 GMT, and the broader TOPIX index declined 0.84 per cent to 1,736.84.

Exporters fell with Canon down 1 per cent at 7,080 yen and Kyocera Corp. falling 0.8 per cent to 12,200 yen.

Dowa Mining Co Ltd, a nonferrous metal manufacturer, dropped 3.4 per cent to 1,210 yen, one of the stocks most affected by a slide in metal prices.

Copper smelter Sumitomo Metal Mining tumbled 4 per cent to 2,625 yen, while Toho Zinc Co Ltd lost 2.2 per cent to 1,107 yen.

Trading houses, which have large investments in the metal industry, were also hit, with Mitsubishi Corp down 2.8 per cent at 3,100 yen and Mitsui & Co falling 2 per cent to 2,395.

Elsewhere, CSK Holdings Corp, an information services company, rose 1.4 per cent to 4,240 yen.

The company lifted its group net profit forecast on Tuesday for the year ending March 2008 to 20 billion yen ($164.5 million), up 11.1 per cent from its previous forecast after winning some court rulings regarding taxes.

First Published: Jun 13, 2007 08:36 IST