(Updates to midday)
By Aiko Hayashi
TOKYO, May 8 (Reuters) - Japan's Nikkei average slipped 0.9
percent on Thursday, dragged down by financial shares such as
Mitsubishi UFJ Financial Group <8306.T> and other recent gainers
seen as expensive, while a tumble on Wall Street dampened
investor confidence.
Still, resource-related shares such as Inpex Holdings
<1605.T> benefited after oil jumped to a record above $123 a
barrel. []
"Of course, the tumble in New York contributed to the
fall here, but what's more important is that Japanese stocks have
become rather expensive in terms of valuations," said Norihiro
Fujito, general manager of the investment research and
information division at Mitsubishi UFJ Securities.
The Nikkei average's expected price-earnings ratio was at
16.5 times on Wednesday, compared to about 16.6 times in Hong
Kong and 17.7 times in India, he said.
"Do you think investors would want to buy Japanese stocks,
considering their valuations level, just as they would Indian and
Chinese stocks?" Fujito said.
The benchmark Nikkei average <> ended the morning
session down 123.54 points at 13,978.94, after booking its
highest close since Jan. 11 on Wednesday.
The broader TOPIX index <> shed 1.1 percent or 15.56
points to 1,377.72.
Receding worries about a global financial crisis have pushed
the Nikkei up 19.6 percent from a year low hit on March 17, while
the banking subindex <.IBNKS.T> has surged 35.5 percent and the
real estate subindex <.IRLTY.T> soared 44.3 percent.
The Mothers market <.MTHR> for start-ups jumped 4.6 percent
to 655.29.
Kenichi Hirano, operating officer at Tachibana Securities,
said individual investors have turned to small and mid-sized
stocks as the Nikkei average's high price-earnings ratio stands
in the way of the benchmark rising much further.
"For today's Japanese stocks, investors can't really seek
higher levels once the Nikkei's PE goes above 15 or 16 times," he
said.
BANKS DOWN
Investors sold financial shares after a recent rally in the
sector and after their U.S. peers fell following a warning from a
top Federal Reserve official that the central bank must be ready
to raise interest rates to curb inflation. []
Top lender Mitsubishi UFJ slid 3.6 percent to 1,118 yen and
the No.2, Mizuho Financial Group <8411.T>, gave up 3.8 percent to
533,000 yen.
Property firms, also recent gainers, fell. Mitsubishi Estate
Co Ltd <8802.T> shed 4.2 percent to 2,875 yen and Sumitomo Realty
& Development Co Ltd <8830.T> lost 4.5 percent to 2,670 yen.
Among resource-related shares, Japan's top oil and gas
developer Inpex Holdings Inc added 0.8 percent to 1.29 million
yen, while trading house Mitsubishi Corp <8058.T> advanced 1.4
percent to 3,550 yen.
U.S. crude <CLc1> was at $123.59 a barrel by 0246 GMT, after
rising to $123.93, an all-time intraday peak, earlier in the
session.
Trade was moderate on the Tokyo exchange's first section, with
863 million shares changing hands, compared with last week's
morning average of 842 million.
Advancing stocks beat decliners by 804 to 755.
(Editing by Brent Kininmont)
