* Nikkei likely to consolidate around current levels -analyst
* Trading houses down after metals fall on china, euro fears
By Aiko Hayashi
TOKYO, May 18 (Reuters) - Japan's Nikkei average was flat on
Tuesday after sinking 4 percent in the past two sessions, with a
stronger yen against the euro amid worries about the euro zone's
fiscal woes offsetting short-covering.
Mitsubishi <8058.T> and other trading houses slid after
industrial metals prices plunged the day before.
The Nikkei earlier rose 1 percent but pared gains in
afternoon trade.
"The market had a hard time finding reasons to keep buying as
the euro was sold again in Tokyo trading," said Kazuhiro
Takahashi, general manager at Daiwa Securities Capital Markets.
"There's a risk that the market could sharply fall -- if the
euro were to further tumble or commodity prices were to keep
sliding, for example -- but it's more likely that it'll
consolidate around these levels for now, given the current
situation."
The benchmark Nikkei <> added 6.88 points to 10,242.64,
off a 10-week closing low hit the previous day.
The broader Topix <> dipped 0.7 percent to 913.91.
The Nikkei's relative strength index (RSI) stayed just below
40. Anything from 30 and below is considered oversold.
"Macro and micro situations are improving both in the United
States and Japan, and stock prices that have moved in the
opposite direction need to catch up with that eventually," said
Mitsuo Shimizu, deputy general manager at Cosmo Securities.
"But problems in the euro zone won't be solved overnight, and
the focus is on whether there's a chance they will end up
bringing down the global economy."
The euro slid to a four-year low against the dollar the
previous day <EUR=> as investors fretted that the steps some
euro-zone nations are taking to cut their budgets will hinder
economic growth.
The euro slipped below 114.00 yen <EURJPY=> before recovering
some ground in Asian trade. It fell to the 112 yen level the
previous day. A stronger yen curbs exporters' profits when
repatriated. []
Many Japanese exporters have set their euro/yen assumption
rates around 120-125 yen, analysts said.
TRADING HOUSES DOWN
Mitsubishi Corp <8058.T> and other trading houses slipped
after industrial metals prices plunged on Monday, with copper
prices falling to their lowest since February. Signs that China's
economy was slowing spooked investors already worried about
Europe's fiscal woes. []
Shares of Mitsubishi Corp lost 1.6 percent to 2,031 yen and
Mitsui & Co <8031.T> shed 0.9 percent to 1,306 yen. Itochu Corp
<8001.T> shed 2.2 percent to 760 yen.
Shares of exporters rose after falling the previous day to
help push down the market. Chip-tester maker Advantest Corp
<6857.T> gained 0.2 percent to 2,197 yen and Kyocera Corp
<6971.T> rose 0.7 percent to 8,500 yen.
DIC Corp <4631.T> tumbled 7.6 percent to 171 yen after the
ink and synthetic resin maker said it plans to raise as much as
21.4 billion yen through a public share offering, leading to a
share dilution of about 15.9 percent.
Trade was moderate, with 2.3 billion shares changing hands on
the Tokyo exchange's first section. Declining shares outnumbered
advancing ones by nearly 3 to 1.
(Editing by Edwina Gibbs)
