Nikkei falls 1 pct, caution before earnings

                                
 * Caution before upcoming earnings results weighs on market
                                
 * Little impact from ruling party defeat at Tokyo poll
                                
 * Brewers climb on news Suntory considering merger with Kirin
                                
 By Shinichi Saoshiro
                                
 TOKYO, July 13 (Reuters) - Japan's Nikkei average fell 1
percent on Monday, giving up earlier gains on caution ahead of
upcoming corporate earnings releases and as the yen remained
resilient against the dollar.
                                
 Kirin Holdings Co <2503.T> gained 8.4 percent after brewer
Suntory Holdings Ltd said on Monday it was considering options
including a merger with Kirin, which would create one of the
world's largest beverage and food firms. [ID:nT358527]
                                
 Investors warily eyed the yen, which rose to a five-month
high against the dollar <JPY=> below 91.80 yen on Friday. The
currency retreated to near 93.00 yen early on Monday before
drifting back to 92.50 yen. [FRX/]
                                
 Market players said bargain hunting by individual investors,
which had helped lift the Nikkei earlier in the session, petered
out with the yen proving resilient.
                                
 There was little impact from a big defeat for Japan's ruling
Liberal Democratic Party (LDP) in a Tokyo poll on Sunday, which
is considered a barometer for the national election.
[ID:nT331319]
                                
 "The election outcome was as expected so it is having a
limited impact on the market so far. Even if the opposition party
was to oust the LDP in a national election, the impact on stocks
can't be gauged until the winning party's policies are hammered
out," said Takahiko Murai, general manager of equities at Nozomi
Securities.
                                
 Soichiro Monji, chief strategist at Daiwa SB Investments,
said factors perceived as equity-supportive were effectively
being cancelled out by incentives viewed as negative.
                                
 "Many investors would consider a ruling party change as
positive for stocks, as that may usher in reforms. But on the
other hand policy shifts could spell tough times for some
industries," Monji said.
                                
 The benchmark Nikkei <.N225> ended the morning down 94.44
points at 9,192.84, a seven-week low, and on track for a nine-day
slide.
                                
 The broader Topix <.TOPX> fell 0.8 percent to 865.28.
                                
 BREWERS UP
                                
 Kirin gained 8.4 percent to 1,400 yen. Other brewers
advanced, with Sapporo Holdings <2501.T> rising 8.5 percent to
548 yen and Asahi Breweries Ltd <2502.T> gaining 4.2 percent to
1,418 yen.
                                
 The food subindex <.IFOOD.T> surged 17 percent after the news
that unlisted Suntory was considering a merger with Kirin, the
biggest advance among the subindexes.
                                
 Daiichi Sankyo <4568.T> gained 3 percent to 1,714 yen after
U.S. health officials approved Eli Lilly and Co <LLY.N> and
Daiichi Sankyo's blood thinner Effient after several delays, and
the companies said they would launch the drug "in the coming
weeks." [ID:nN10532375]
                                
 Daiichi Sankyo's research partner, Ube Industries <4208.T>,
which jointly developed the drug, rose 2.4 percent to 261 yen.
                                
 Kenedix Inc <4321.T>, a unit of U.S. real estate investment
and services firm Kennedy-Wilson, tumbled by its daily limit of
4,000 yen, or 11.1 percent, to 32,200 yen after Nikko Citigroup
cut its rating on the stock to "hold/high risk" from "buy/high
risk".
                                
 Closely watched earnings releases this week include those of
Goldman Sachs <GS.N> and Intel <INTC.O> on Tuesday, JP Morgan
Chase <JPM.N> on Thursday and Bank of America <BAC.N> on Friday.
                                
 Trade was moderate on the Tokyo exchange's first section,
with 1 billion shares changing hands, in line with last week's
morning average.
                                
 Declining stocks outnumbered advancing ones by more than 3 to
1.
 (Editing by Chris Gallagher)