* Banking shares lose steam after sharp rally
* Dentsu drops on Q4 loss, sees slow recovery
By Aiko Hayashi
TOKYO, May 12 (Reuters) - The Nikkei average fell 1.4 percent
on Tuesday after hitting a six-month closing high the previous
day, with bank shares such as Mitsubishi UFJ Financial Group
<8306.T> taking a breather following sharp gains fuelled by
optimism about the U.S. banking system.
Dentsu Inc <4324.T>, Japan's biggest advertising agency, fell
more than 6 percent after reporting a fourth-quarter loss of 24.6
billion yen ($250 million) and forecasting a weaker recovery than
expected this year. []
"Investors are locking in profits for now as a big event has
passed with the results of U.S. government stress tests on big
banks coming in as expected," said Takahiko Murai, a general
manager of equities at Nozomi Securities.
"The focus will now shift to U.S. consumer spending, which
accounts for a major part of its GDP, as investors will start
examining fundamentals to see if hopes for an economic recovery,
which have pushed up stock prices by more than 30 percent so far,
is really taking place."
The benchmark Nikkei <> shed 136.31 points to 9,315.67.
It rose 0.2 percent on Monday to its highest close since Nov. 5.
Tuesday's fall comes after the Nikkei had recovered about 34
percent from an intraday low hit on March 10.
The broader Topix <> declined 1.3 percent to 889.19.
"The Nikkei average has risen largely on expectations and it
may find it hard to go above 10,000 for a while. For that,
investors will need to see April-June corporate earnings
results," said Katsuhiko Kodama, senior strategist at Toyo
Securities.
BANKS FALL
Japan's banking subindex <.IBNKS.T> fell 3 percent, after
rising nearly 20 percent over the past three trading days on
growing investor confidence about the banking system in the wake
of U.S. government stress tests.
Top lender Mitsubishi UFJ slid 3.7 percent to 649 yen and
Mizuho Financial Group <8411.T> shed 3.9 percent to 250 yen.
Nomura Holdings Inc <8604.T>, Japan's biggest brokerage, lost
3.7 percent to 687 yen.
Shares of Dentsu tumbled 6.4 percent to 1,825 yen, one of the
top drags on the Nikkei 225.
Exporters also fell on a stronger yen as it curbs their
profits when funds are repatriated. The dollar was trading around
97.20 yen <JPY=> after moving above 98 yen the previous day.
Toyota Motor Corp <7203.T>, the world's biggest automaker,
slipped 1.6 percent to 3,730 yen, while Honda Motor Co <7267.T>
declined 1.6 percent to 2,855 yen.
Nissan Motor Co <7201.T>, which is set to report results
after the market close, dipped 0.4 percent to 513 yen.
Suzuki Motor <7269.T> fell 1.5 percent to 1,995 yen, after
eking out some gains earlier.
The automaker forecast an 87 percent drop in profit this year
citing slumping global demand and a stronger yen, though it
escaped a loss in January-March, the final quarter of the last
financial year, thanks to growth in its main Indian market.
[]
Among high-tech exporters, Sony Corp <6758.T> dropped 3.3
percent to 2,605 yen.
But shares of Sanyo Electric <6764.T> jumped 9.1 percent to
191 yen following a two-notch upgrade by Credit Suisse to
"outperform" from "underperform".
Credit Suisse said it was recommending Sanyo as a core green
energy stock and that Sanyo would benefit from its ties with
Panasonic <6752.T> as it would receive help in cutting costs and
promoting its lithium-ion batteries.
Trade was moderate on the Tokyo stock exchange's first
section, with 1.2 billion shares changing hands, compared with
last week's morning average of 1.3 billion.
Declining stocks outnumbered advancing ones, 980 to 569.
(Editing by Joseph Radford)
