* Toyota to use Sanyo batteries from 2011-source
* Canon, automakers jump after ratings upgrades
* Market cautious about signs of econ recovery, election eyed
By Aiko Hayashi
TOKYO, Aug 19 (Reuters) - Japan's Nikkei average dipped 0.2
percent in choppy trade on Wednesday, weighed down by investor
caution after disappointing U.S. housing data, but blue-chip
stocks such as Canon Inc <7751.T> and carmakers jumped after
brokerage upgrades.
Sanyo Electric Co <6764.T> soared as much as 17 percent to a
near two-month high, after a source familiar with the matter said
Toyota Motor Corp <7203.T> would buy batteries for hybrid cars
from Sanyo to keep pace with growing demand for cleaner vehicles.
[]
"Investors are picking up individual stocks with specific
news, but their basic stance is still index-trading mainly in
stock futures," said Yutaka Miura, senior technical analyst at
Mizuho Securities.
"Investors buy on dips but they don't want to aggressively
keep buying due to concerns that economic indicators won't be all
positive going forward as data so far has been mixed."
In moderate trade, the benchmark Nikkei <> fell 24.46
points to 10,260.50, while the broader Topix <> was flat at
949.32.
The S&P 500 Index <.SPX> rose 1 percent on Tuesday, boosted
by better-than-expected results from Home Depot Inc <HD.N> and
Target Corp <TGT.N>, which were largely due to cost-cutting and
tight controls over inventory, offsetting an unexpected drop in
housing starts.
U.S. government data showed construction starts for
single-family dwellings, the worst-hit part of the housing
market, rose 1.7 percent last month from June to an annual rate
of 490,000 units -- the highest since October.
But a 13.3 percent drop in new multifamily home projects
pushed overall housing starts down 1 percent to an annual rate of
581,000 units after two months of gains. []
Market players said investors were also hesitant to take big
positions ahead of Japan's national election on Aug. 30.
"Unless the market sees convincing plans for reforms and
economic measures from the political side, it may not be able to
avoid selling pressure by overseas investors," said Hiroaki
Kuramochi, chief equity marketing officer at Tokai Tokyo
Securities.
Japan's opposition Democratic Party leads Prime Minister Taro
Aso's Liberal Democratic Party in newspaper polls ahead of the
election. []
AUTOMAKERS STRONG, SANYO SOARS
As automakers and other exporters gained, shares of companies
that rely on domestic demand fell, though market players said
trade was still dominated by index-trading.
Fast Retailing Co <9983.T>, an operator of casual clothing
store chain Uniqlo, shed 2.5 percent to 10,580 yen to become the
top drag on the Nikkei 225. Mobile phone carrier Softbank Corp
<9984.T> fell 1.5 percent to 2,000 yen.
Canon climbed 3 percent to 3,460 yen after Goldman Sachs
upgraded the company to "buy" from "neutral" and added it to its
conviction list, citing expectations for a strong rebound in
laser beam printer shipments and resilient demand for digital
cameras.
Toyota and other automakers also gained after Nomura
Securities raised its investment stance on the sector to
"bullish" from "neutral".
Nomura cited improvement in company performance in the first
quarter, hopes for recovery in demand due to government support
measures, and a growing possibility that companies may raise
their forecasts.
Toyota climbed 1.7 percent to 4,110 yen, Honda Motor Co
<7267.T> jumped 3 percent to 3,100 yen and Mazda Motor Co
<7261.T> gained 2.7 percent to 264 yen. Nissan Motor <7201.T>
advanced 1.6 percent to 712 yen.
The transport subindex <.ITEQP.T> gained 1.6 percent to
become the biggest gainer among the subindexes.
Sanyo shares were up 14.3 percent at 256 yen, after hitting
their highest since June 29.
Toyota, the world's biggest automaker, will first use Sanyo's
lithium-ion batteries from around 2011, said the source, who
spoke on condition of anonymity because the information is not
yet public.
Some 998 million shares changed hands on the Tokyo exchange's
first section, compared with last week's morning average of 932
million.
Declining shares outnumbered advancing ones, 899 to 590.
(Reporting by Aiko Hayashi; Editing by Joseph Radford)
