* Yen's resilience vs dollar drags exporters lower
* Investors looking to book profits after rally -fund manager
* Japan-China spat weighs on China-related shares -trader
* Nikkei has support near 9,400 on daily Ichimoku chart
By Masayuki Kitano
TOKYO, Sept 24 (Reuters) - Tokyo stocks fell 1.3 percent on
Friday, hurt as the yen's resilience versus the dollar ate
further into gains made since Japan's currency intervention last
week and by rising diplomatic tensions between Japan and China.
The two countries are feuding over disputed islets in the
East China Sea, while China has detained four Japan nationals on
suspicion of entering a Chinese military zone.
Tokyo has also heard that rare earth exports to Japan from
China have been blocked, although Japan's trade minister said
that China has told Japan that there was no ban. []
Asahi Glass <5201.T> and other glass makers which use a rare
earth in an abrasive lost ground.
"It is becoming a situation where you have no choice but to
pay heed to China-related risks," said Tsutomu Yamada, market
analyst at kabu.com Securities.
"It is hard to tell how much this will escalate," he said.
One worry is whether the tensions would lead to boycotts of
Japanese products in China, although it is hard to say whether
that will occur at this point, he said.
The benchmark Nikkei <> fell 119.61 points to 9,446.71,
declining for a third straight day.
It hit a seven-week high just above 9,700 on Tuesday as the
yen retreated against the dollar in the wake of yen-selling
intervention by Japanese authorities last week. And it is still
up about 7 percent for the month, on track for its biggest
monthly percentage gain in six months.
The broader Topix index <> declined 0.8 percent to
839.76.
The yen has clawed back up from lows near 85.95 yen to the
dollar <JPY=> struck after last week's intervention and was
trading at 84.54 yen to the dollar on Friday.
The Nikkei has support near 9,400, which is right around the
bottom of the cloud on daily Ichimoku charts.
While the potential for further yen-selling intervention is a
supportive factor for Tokyo shares, investors are reluctant to
chase shares higher, said Kiyoshi Noda, chief fund manager for MU
Investments.
"I think many market players are looking for chances to book
profits if there is any rebound," Noda said.
"There are persistent concerns about the U.S. economy, and
unless that situation improves, it is hard to think that there
will be a big shift in the overall trend," he added.
Sony Corp <6758.T> and other exporters slipped, with Sony
losing 0.5 percent to 2,575 yen, Honda Motor Co <7267.T> shedding
1 percent to 2,925 yen and chip tester maker Advantest <6857.T>
falling 2.8 percent to 1,686 yen.
Among glass makers, Asahi Glass fell 3.5 percent at 868 yen,
and Nippon Sheet Glass <5202.T> fell 2.1 percent to 183 yen.
Hoya, which makes glass memory disks for hard disk drives,
dropped 1.6 percent to 2,068 yen.
Some glass makers use abrasive that contains a rare earth
element called cerium, whose supply was already tight after the
Chinese government cut rare earth exports for 2010 by 40 percent.
China dominates the global supply of rare earths.
Hitachi Construction Machinery <6305.T>, a company known for
being highly exposed to the Chinese market, fell 1.7 percent to
1,784 yen.
"There has been a negative reaction and there have been signs
of selling pressure on China-related shares," said Hiroaki
Kuramochi, chief equity marketing officer at Tokai Tokyo
Securities.
(Editing by Edwina Gibbs)
