* Little impact seen from as-expected BOJ tankan
* Worries over yen strength weigh on some exporter shares
* JAL surges after government says it is ready to support it
* Banking sub-index <.IBNKS.T> hits lowest since mid-March
By Masayuki Kitano
TOKYO, Oct 1 (Reuters) - Japan's Nikkei average fell 1.4
percent on Thursday, with exporters such as Advantest Corp
<6857.T> sagging on concerns that the yen's recent strength may
eat into their overseas profits.
Little impact was seen from the Bank of Japan's closely
watched tankan survey, which showed that Japanese business
confidence improved as expected in the three months to September.
[]
In light trade, the benchmark Nikkei dropped close to a
two-month low hit earlier this week, taking its cues from a dip
in U.S. shares the previous day and the yen's recent strength
against the dollar.
"The dollar's exchange rate is still below 90 yen, so market
players are still wary about that," said Toshiyuki Kanayama, a
market analyst at Monex Inc.
Many Japanese exporters have set their exchange rate
assumptions for the dollar around 90-95 yen for the current
fiscal year to March.
Bucking the trend was Japan Airlines Corp <9205.T>, which
climbed after Japan's prime minister and transport minister said
on Wednesday the government was ready to support it, aiming to
dispel worries over the viability of the loss-making carrier.
[]
The Nikkei began the second half of Japan's fiscal year on a
weak note, falling 143.20 points to 9,990.03 <>. It declined
as low as 9,987.35, dipping close to a two-month low of 9971.05
hit earlier this week.
The broader Topix fell 1.6 percent to 895.44 <>, its
lowest in 10 weeks.
Market players said Tokyo shares were likely lifted the
previous day on window-dressing buying at the end of Japan's
fiscal half-year, and that their weakness this morning may be
partly due to the fact that such buying has dissipated.
U.S. stocks fell on Wednesday after a surprising contraction
in an index of Midwest business activity, but buying of
technology bellwethers like Cisco Systems Inc at the end of a
strong quarter limited losses. []
A focal point in the near term will be forthcoming U.S.
economic indicators including jobs data on Friday, as well as
fluctuations in the yen.
The yen stood at 89.89 yen <JPY=> to the dollar on Thursday.
It hit an eight-month high against the dollar of 88.23 yen on
trading platform EBS on Monday.
"While the dollar rose above 90 yen the other day, it looks
as if the trend for yen strength might still be in place," said
Hiroaki Osakabe, a fund manager at Chibagin Asset Management.
Among exporters, Advantest <6857.T> fell 5 percent to 2,365
yen, Honda Motor <7267.T> dropped 2.5 percent to 2,695 yen
<7267.T> and Canon Inc <7751.T> lost 3 percent to 3,520 yen
<7751.T>.
The banking sector sub-index fell to as low as 138.37
<.IBNKS.T>, its lowest since mid-March.
The banking sector has been made jittery by a string of
events including financial services minister Shizuka Kamei's
interest in introducing a moratorium on the repayment of the
principal on mortgages and bank loans to help small and midsize
businesses.
In addition, plans announced last week by Nomura Holdings
<8604.T> to issue up to $5.6 billion in shares, have underscored
worries that banks might also come out with big share offerings
in the face of a global regulatory push for banks to carry bigger
capital buffers.
Mitsubishi UFJ Financial Group <8306.T> fell 5.4 percent to
456 yen, Mizuho Financial Group <8411.T> slipped 2.8 percent to
173 yen and Sumitomo Mitsui Financial Group <8316.T> dropped 3.8
percent to 3,010 yen.
Kobe Steel <5406.T> rose 1.9 percent to 160 yen after the
company on Wednesday raised its operating profit forecast for the
business year ending in March to 15 billion yen from 5 billion
yen. On a net basis, the steelmaker narrowed its annual loss
estimate to 35 billion yen from 45 billion yen. []
Japan Airlines climbed 6.1 percent to 140 yen.
Trade was light on the Tokyo exchange's first section, with
905 million shares changing hands, below last week's daily
average of 1 billion.
Declining stocks outnumbered advancing ones by more than 5 to
1.
(Editing by Joseph Radford)
