* Uncertainty about yen, U.S. economy weighs on the market
* Astellas slides after $3.5 bln hostile bid for OSI Pharma
By Aiko Hayashi
TOKYO, March 2 (Reuters) - Japan's Nikkei average was flat on
Tuesday as investors held back due to caution about the outlook
for the U.S. economy following a mixed bag of data, while
Astellas Pharma <4503.T> dropped after launching a hostile bid
for a U.S. firm.
Shares of automakers fell, hurt by worries about a stronger
yen, but chip-linked stocks such as Advantest <6857.T> gained
after a bullish outlook from flash memory maker SanDisk Corp
<SNDK.O> pushed up shares of their U.S. peers. []
[]
Recent data in the United States suggested the economic
recovery still faced major headwinds, including Friday's report
of a surprise drop in January home sales to a seven-month low and
weaker consumer sentiment.
Still, other data showed U.S. manufacturing grew in February,
though more slowly than expected, while consumer spending rose
for a fourth straight month, showing the economy continued a
modest recovery. []
"We're seeing a lot of data from the U.S. lately that is
weaker than market expectations, and that is fuelling uncertainty
about the U.S. economic outlook," said Yutaka Miura, a senior
technical analyst at Mizuho Securities.
The benchmark Nikkei <> was down 1.1 points at 10,170.96
in midafternoon, after spending most of the morning in positive
territory.
The broader Topix <> was flat at 898.16.
Trade was dominated by short-term speculative investors,
which was keeping the Nikkei penned within a tight range, said
Masayoshi Okamoto, head of dealing at Jujiya Securities.
"There's also worry about the potential for a stronger yen,
and this is keeping a lot of investors sidelined," he added.
The dollar edged up 0.2 percent against the yen to 89.34 yen
<JPY=> after falling to its lowest levels in a month near 88.70
yen on Monday. Investors fret about a stronger yen as it eats
into exporters' overseas profits when they are repatriated.
For further clues on the U.S. economy, investors are awaiting
Friday's non-farm payrolls report, the most closely watched
measure of the country's labour market.
It is expected to show 50,000 jobs lost in February, compared
with a decline of 20,000 in January, and the U.S. unemployment
rate ticking up to 9.8 percent from 9.7 percent.
ASTELLAS DRAGS
Shares of Astellas fell 1.9 percent to 3,280 yen after it
launched a hostile bid for U.S.-based OSI Pharmaceuticals
<OSIP.O>, seeking to gain access to its blockbuster Tarceva
cancer drug.
In the United States, OSI shares surged 51.9 percent to
$56.25, well above Astellas' $52-per-share offer as analysts
expected a higher price or even a rival bid from potential
suitors such as Swiss drugmaker Roche Holding AG <ROG.VX>, OSI's
partner on Tarceva. []
"Astellas would have to sweeten its offer to satisfy OSI's
management and shareholders," said Kenji Masuzoe, an analyst at
Deutsche Securities.
"If OSI's top management leave the company in protest against
a takeover, OSI would be of little use. On the other hand,
Astellas' shareholders may not like to see a higher offer."
Shares of automakers fell amid worries about a stronger yen.
Honda Motor Co <7267.T> shed 0.2 percent to 3,075 yen and Suzuki
Motor Corp <7269.T> declined 0.9 percent to 1,896 yen.
KDDI Corp <9433.T> lost 1.5 percent to 478,500 yen after
Goldman Sachs downgraded it to "sell" and cut the target price to
450,000 yen from 532,000 yen, saying there were no real positives
in sight for Japan's second-largest mobile telecoms firm.
But chip-tester maker Advantest Corp <6857.T> rose 1.7
percent to 2,134 yen, while stepper maker Nikon <7731.T> added 1
percent to 1,975 yen. Memory maker Tokyo Electron <8035.T> gained
1.6 percent to 5,600 yen.
(Additional reporting by Elaine Lies and Yumiko Nishitani;
Editing by Chris Gallagher)
