*Nikkei falls 5.1 percent as stronger yen drags
*Grim forecasts from Best Buy, Intel weigh on tech exporters
*Advertising firm Dentsu tumbles in symbol of corporate pain
(Adds stocks, details)
By Elaine Lies
TOKYO, Nov 13 (Reuters) - The Nikkei average sank 5.1 percent
on Thursday as a strong yen and a wave of grim earnings forecasts
from the United States boosted worries about the global economy,
dragging tech exporters such as Sony Corp <6758.T> lower.
In a sign of the pain being felt across Japan's corporate
sector, Dentsu Inc <4324.T>, the nation's largest advertising
company, fell 8.2 percent after it cut its annual profit outlook
by 20 percent on Wednesday. []
Nippon Sheet Glass <5202.T> and Asahi Glass <5201.T> tumbled
after the European Commission on Wednesday imposed its highest
ever cartel penalty, fining a group of companies including them
more than 1.3 billion euros. []
Consumer electronics makers were especially pressured after
Best Buy <BBY.N>, the largest U.S. electronics chain, slashed its
forecast, saying that consumers were cutting back on spending
amid the deepening economic crisis in one of the biggest
destinations for Japanese goods.
"There isn't a lot of light right now," said Hiroaki Osakabe,
a fund manager at Chibagin Asset Management.
"With so many grim forecasts and the situation in developing
nations growing worse, things are tough."
The dollar managed to claw higher against the yen by midday,
after the Japanese currency soared on Wednesday as investors
shunned risky assets after comments by U.S. Treasury Secretary
Henry Paulson heightened concerns about the economy and sparked a
global sell-off in equities <JPY=>.
"When risk aversion really starts to rise, you get a vicious
cycle of falling stocks, low oil prices and a higher yen, all of
them feeding into each other," said Nagayuki Yamagishi, a
strategist at Mitsubishi UFJ Securities.
Paulson said the Treasury's focus now would be on shoring up
financial institutions with direct investments as the government
backed away from using its $700 billion bailout to buy up bad
mortgages, adding to uncertainty about how the government plans
to revive bank lending. []
But Chibagin Asset's Osakabe said that while the comments had
probably been behind the sharp falls shortly after the opening,
their direct impact had apparently faded, noting that while bank
shares were weak, they were far from the hardest hit.
CONSUMER ELECTRONICS CRUMBLE
Adding to the woes of electronics firms was a shock profit
warning from U.S. tech bellwether Intel Corp <INTC.O>, which cut
its fourth-quarter revenue forecast by 14 percent and said demand
is weak in all market segments and geographies [].
The announcement hammered U.S. tech shares, with the
Philadelphia Semiconductor Index <.SOXX> tumbling 5 percent.
Sony lost 7.5 percent to 2,025 yen, while Canon Inc <7751.T>
shed 5.4 percent to 2,875 yen, becoming one of the top drags on
the Nikkei 225 by volume weight. Panasonic Corp <6752.T> fell 6
percent to 1,404 yen.
Dentsu tumbled to 152,100 yen after slashing its profit
forecast, with its clients cutting their advertising budgets as
high raw material prices, a stronger yen and a faltering economy
eat into their profits. []
The firm, which ranks fifth in the global advertising market,
cut its operating profit forecast for the full year to March to
45.3 billion yen ($463.1 million), short of a consensus of 51.2
billion yen in a poll of 13 analysts by Reuters Estimates.
Bank shares weakened after the Nikkei business daily said on
Thursday that Mizuho Financial Group <8411.T> is considering
issuing preferred subscription securities to Japanese insurance
companies this year as a way to increase its capital by around
300 billion yen. []
Shinichiro Matsushita, an analyst for Daiwa Securities Co
Ltd, said moves by Japanese banks to boost capital were raising
concerns among investors.
Japan's top bank, Mitsubishi UFJ Financial Group <8306.T>,
said last month it will raise up to 990 billion yen to replenish
its capital base.
"There are worries about a possible worsening in the
near-term supply and demand balance. It is a very good thing for
the longer term but leads to dilution worries for people
concerned about the short term," he added.
Mitsubishi UFJ <8306.T> lost 4.4 percent to 588 yen, while
No. 2 bank Mizuho fell 5.1 percent to 258,600 yen. Sumitomo
Mitsui Financial Group <8316.T> dropped 6.5 percent to 374,000
yen.
Asahi Glass slid 6.5 percent to 507 yen and Nippon Sheet
Glass fell 9.6 percent to 312 yen, as the two companies said they
would review their profit forecasts in the wake of the European
Commission's decision. []
Pilkington -- a UK unit of Nippon Sheet Glass -- will be
fined 370 million euros, Asahi 113.5 million and Belgium's
Soliver 4,396 million for "discussing target prices, market
sharing and consumer allocation," the Commission said.
Trade was light on the Tokyo exchange's first section, with
944 million shares changing hands, compared with last week's
morning average of 1.1 billion.
Declining stocks outnumbered advancing ones by nearly 10 to
1.
(Reporting by Elaine Lies and Masayuki Kitano; Editing by Chris
Gallagher)
