Nikkei dips in light trade, awaits earnings, data

                                
 * Nikkei pulls back from 25-day moving average
                                
 * Investors await U.S. corporate earnings this week
                                
 * Limited impact from opposition win in local election
                                
 * Trade light, volume below last week's morning average
                                
 By Masayuki Kitano
                                
 TOKYO, July 6 (Reuters) - Japan's Nikkei average fell 1.6
percent on Monday with investors lacking the conviction to push
shares higher after the Nikkei's surge to an eight-month peak
last month.
                                
 Aeon Co Ltd <8267.T> , Japan's second-biggest retailer,
initially fell by more than 1 percent after the Nikkei business
daily said it likely logged a 2 billion yen ($20.83 million) net
loss for the three months to May, but later shed its losses to
edge higher. [ID:nT265353]
                                
 Nippon Yusen <9101.T> and other shippers fell after the
Baltic Exchange's main sea fright index <.BADI>, which tracks
rates to ship dry commodities, dropped more than 4 percent on
Friday, dented by softer demand for goods. [ID:nL3440007]
                                
 Moves in the Nikkei were subdued, with investors awaiting
upcoming economic data and corporate earnings for hints on
direction, market analysts said.
 "There are few reasons to actively sell shares when their
prices take a dip because the economy is improving, albeit
gradually," said Hideyuki Ishiguro, a supervisor in Okasan
Securities' investment strategy department.
 But with U.S. and Japanese company earnings to be announced
over the next few weeks, there is no compelling reason to chase
share prices higher at this point, Ishiguro said.
                                
 The U.S. corporate earnings reporting season gets under way
this week with bellwethers Alcoa <AA.N> and Chevron <CVX.N>
posting quarterly scorecards. [RESF/US]
                                
 Alcoa's earnings could be a focal point, since the company's
performance is seen as offering hints on broader economic
conditions, said Yumi Nishimura, a deputy general manger at Daiwa
Securities SMBC.
                                
 Another focal point in the near term will be the U.S.
Institute for Supply Management's non-manufacturing index due
later on Monday, market analysts said.
                                
 The Nikkei <.N225> lost 154.80 points to 9,661.27, below its
25-day moving average, now around 9,800.
                                
 The Nikkei has lost some momentum after reaching an
eight-month high of 10,170.82 in June, but is still nearly 40
percent above a trough hit in March.
                                
 The broader Topix <.TOPX> fell 1.0 percent to 911.10.
                                
 Trading volume was light, with 0.8 billion shares changing
hands on the Tokyo exchange's first section, down from last
week's morning average of just below 1 billion shares.
                                
 Declining shares outnumbered advancing ones by about 2 to 1.
                                
 NOT CHASING PRICES HIGHER
                                
 Among the gainers was Ube Industries <4208.T>, which rose 1.4
percent to 283 yen.
                                
 The chemicals and cement manufacturer edged higher after
Daiwa Institute of Research lifted its rating to "2" from "3",
citing a marked improvement in its sales, driven by a recovery in
demand in China and the rest of Asia.
                                
 Investors seem reluctant to chase share prices higher at this
point, and are probably looking to sell on any rallies, said
Daisuke Uno, chief strategist at Sumitomo Mitsui Banking Corp.
 Some recent data including the Bank of Japan's tankan survey
of business sentiment released last week may be making investors
cautious, Uno said.
                                
 The tankan showed that confidence among big manufacturers
improved from a record low hit three months ago. But it also
showed that big firms plan to cut capital spending by 9.4 percent
in the financial year to March 2010, a bigger cut than the market
had expected. [JPBCLG=ECI]
                                
 Market analysts said there was little direct impact from an
opposition candidate winning an election for governor of a
prefecture in central Japan on Sunday. The result added to
speculation that lawmakers within the LDP would seek to replace
unpopular Prime Minister Taro Aso while trying to delay a general
election due by October. [ID:nT289639]
                                
 Nishimura at Daiwa Securities SMBC said Sunday's election
result by itself was unlikely to be a direct trading factor for
the Nikkei. But some investors may start to take a wait-and-see
stance until the general election takes place, she said.
                                
 Shipping firms retreated, with Nippon Yusen falling 4.2
percent to 393 yen and Kawasaki Kisen <9107.T> dropped 3.2
percent to 367 yen.
                                
 Retailer Aeon was 0.1 percent higher at 896 yen after having
fallen as low as 878 yen.
 (Additional reporting by Shinichi Saoshiro; Editing by Michael
Watson)