* Nikkei slides, exporters fall after dollar hits 7-mth low
* JAL strong on news of talks with American Airlines, Delta
* Support at level of 50-day moving average and then 10,000
By Elaine Lies
TOKYO, Sept 14 (Reuters) - Japan's Nikkei average fell 2.5
percent on Monday, pushed lower by Canon Inc <7751.T> and other
exporters after the dollar hit a fresh seven-month low against
the yen in early trade.
But Japan Airlines <9205.T> (JAL) climbed nearly 7 percent
following news that the struggling airline was in talks on
investment by American Airlines and Delta Airlines <DAL.N>.
[] []
The dollar fell to a seven-month low below 90.21 yen in early
Asian trade, helped by talk of Japanese fund repatriation and the
view that it is replacing the yen as the funding currency for
carry trades. It later pared some of its losses to be 0.3 percent
lower at 90.40 yen. <JPY=>
"These dollar levels are making things very tough for the
stock market -- not so much in the short term necessarily, but in
the negative impact it could have on earnings estimates for later
in the year," said Noritsugu Hirakawa, a strategist at Okasan
Securities.
"This raises the possibility that widely anticipated upward
revisions in a number of estimates for the second half could end
up being fairly small-scale at best."
Though there is likely to be a fair amount of variation,
Hirakawa said he thought a lot of major manufacturers had a
break-even level of around 95 yen.
Market players fret that the yen's rise against the dollar
could hurt the outlook for corporate earnings, as as stronger yen
cuts into the value of exporters' overseas profits when they are
repatriated.
"The fact that the Euro is still holding its ground will help
support the market a bit, but the dollar certainly does not seem
to be heading in a good direction," said Hiroaki Osakabe, a fund
manager at Chibagin Asset Management.
The benchmark Nikkei <> fell 257.70 points to 10,186.63,
while the broader Topix <> lost 2 percent to 931.53.
Support for the Nikkei is seen at 10,100, around where its
50-day moving average comes in, and then at 10,000 -- the level
of its 75-day moving average as well as being an important
psychological support level.
Should it break below this, the next support is at 9,800,
where the 100-day moving average lies.
"If the Nikkei were to break below 10,000, the mood in the
market would change quite a lot," said Osakabe.
Uncertainty about the policies of Japan's new government, to
take office on Wednesday, appeared to be keeping some players
sidelined, though the impact was unlikely to be strong.
Victory in an Aug. 30 election handed the novice Democratic
Party of Japan the reins of government and the job of reviving a
struggling economy, ending half a century of almost unbroken rule
by the Liberal Democratic Party.
JAL FLIES
JAL rose 6.8 percent to 174 yen, outperforming the air
transport subindex <.IAIRL.T>, which rose 2 percent to become the
biggest gainer among the subindexes.
JAL, Asia's largest airline by revenues, lost about $1
billion last quarter and has been seeking investors to prop up
its finances for a state-supervised overhaul expected to include
job cuts, a reduction in routes and asset sales.
"There's a bit of concern about various issues involved with
these possibilities, but at least JAL now looks unlikely to fail,
and that's being taken positively by the market," Yamagishi
added.
Broad selling hit most sectors, with only the air transport
and sea transport sub-indexes <.ISHIP.T> in positive territory.
Among exporters, Toyota Motor Co <7203.T> fell 2.1 percent to
3,760 yen, Canon dropped 3.6 percent to 3,440 yen and Honda Motor
Corp <7267.T> lost 2.8 percent to 2,785 yen.
Davinci <4314.OJ> was untraded with a glut of sellers at
12,350 yen, down 2,000 yen or 14 percent from Friday's close of
14,350 yen after the real estate investor said it was likely to
give up control of a large office building in Tokyo as it faces
problems raising funds to repay debts.
Trade fell off slightly, with 908 million shares changing
hands on the Tokyo exchange's first section compared to last
week's morning average of 1.1 billion.
Declining shares outnumbered advancing ones by about 9 to 1.
(Editing by Michael Watson)
