* Nikkei down 0.4 pct, after 4.9 pct rally the previous day
* Nomura slides nearly 4 pct on record quarterly loss
* Major banking shares gain on hopes for govt measures
(Adds stocks, details)
By Aiko Hayashi
TOKYO, Jan 28 (Reuters) - The Nikkei average fell 0.4 percent
on Wednesday as investors dumped shares in companies reporting
grim earnings such as Nomura Holdings <8604.T>, while recent
gainers lost ground after sharp gains the previous day.
Nomura, Japan's largest brokerage, slid nearly 4 percent,
after posting a record $3.8 billion yen quarterly loss, hit by
the cost of integrating Lehman Brothers' operations, soured
trades and its exposure to Iceland and Bernard Madoff.
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But major banking shares such as Mitsubishi UFJ Financial
Group <8306.T> gained after the Japanese government said it would
use public funds to help non-financial companies, easing worries
about the risk of bad loans.
"Profit-taking is dominating the market after yesterday's
huge gains, but I don't expect it to fall too much as external
factors -- gains in U.S. stocks and a softer yen -- are not bad,"
said Soichiro Monji, chief strategist at Daiwa SB Investments.
"But investors have strong concerns about manufacturers'
earnings because of their exposure to the deteriorating global
economy and the risk that the yen could appreciate going
forward."
The benchmark Nikkei <> shed 29.61 points to 8,031.46.
It jumped 4.9 percent on Tuesday to book its biggest one-day gain
since Dec 15. The broader Topix <> slipped 0.6 percent to
800.85.
The Dow Jones <> rose 0.7 percent on Tuesday amid a rare
bit of encouraging news on the earnings front from companies,
including American Express <AXP.N>.
Some market analysts said technical indicators show the
Nikkei average may be heading for further gains.
"Charts tell us the Nikkei will likely move to near 8,400,
the level of its 25-day moving average," said Fumiyuki Nakanishi,
manager at SMBC Friend Securities.
NOMURA DOWN
Nomura shares lost 3.6 percent to 616 yen, although market
players said the market had largely factored in the brokerage's
poor results.
Recent gainers fell, with Toyota Motor Corp <7203.T> down 0.8
percent at 2,955 yen and Fast Retailing Co <9983.T> shedding 2.5
percent to 11,110 yen.
Canon Inc <7751.T> dipped 0.2 percent to 2,575 yen after a
newspaper reported the camera and office equipment maker's
operating profit will likely drop about 60 percent this year
primarily due to the strong yen. []
Canon is set to announce its 2008 results and outlook for
2009 at 3 p.m. (0600 GMT) on Wednesday.
Shares of Toshiba Corp <6502.T> slipped 1.1 percent to 371
yen on a report that the firm plans to shutter some assembly
plants for system and discrete chips in Japan and instead expand
output in Thailand and Malaysia and from outside suppliers.
[]
Mitsubishi UFJ, Japan's largest bank, gained 2 percent to 507
yen, while Sumitomo Mitsui Financial Group <8316.T>, which is set
to report earnings after the close, jumped 3 percent to 3,420
yen.
"Mega banks should be a buy on the news, as the government
will protect banks in case they lent to companies that may end up
not being able to pay back the money they borrowed," said
Nakanishi at SMBC Friend Securities.
Trade was moderate on the Tokyo exchange's first section,
with 887 million shares changing hands, compared with last week's
morning average of 824 million.
Declining stocks outnumbered advancing ones by 2 to 1.
(Reporting by Aiko Hayashi; Editing by Edwina Gibbs)
