(Adds stocks, details)
By Elaine Lies
TOKYO, Jan 11 (Reuters) - Japan's Nikkei average slipped to a
19-month low on Friday as growing fears about the domestic
economy hit retailers and outweighed hopes of large U.S. interest
rate cuts to tackle a slowdown in the world's largest economy.
J.Front Retailing Co Ltd <3086.T>, Japan's top department
store operator, fell 10.7 percent to 833 yen after it slashed its
full-year outlook on weak clothing sales, and the largest
retailer Seven & I Holdings Co Ltd <3382.T> fell 6.2 percent to
2,890 yen.
The fall in Japanese shares came despite a rally on Wall
Street after Federal Reserve Chairman Ben Bernanke acknowledged
on Thursday that the economy faces increased risks and indicated
that the Fed is ready to cut interest rates aggressively to
support growth. []
"Domestic concerns appear to be trumping the hopeful
expectations that boosted Wall Street," said Tsuyoshi Segawa, an
equity strategist Shinko Securities.
Annual growth in Japanese bank loans slowed to the lowest in
almost two years in December, data released on Friday showed,
reflecting companies' growing cautiousness in light of an
uncertain economic outlook. []
"I think it's starting to become clear that the Japanese
economy is worsening, and we can't keep blaming it solely on what
happens overseas," said Masayoshi Okamoto, head of dealing at
Jujiya Securities.
Bank of Japan Governor Toshihiko Fukui said on Friday the
pace of Japan's economic growth seems to be slowing due to a drop
in housing investment, but the expansion trend is still intact.
Okamoto and others said investors were skittish ahead of a
three-day weekend in Japan because of what could happen overseas,
prompting them to dump shares.
"With a lot of key things happening overseas next week,
including large bank earnings, nobody wants to risk the volatile
moves that may result as the Japanese market tries to digest
overseas events in a hurry -- as happened after the New Year's
holiday," he said.
On Jan. 4, Japan's first trading day this year, the Nikkei
tumbled 4 percent as investors dumped shares following a sharp
advance by the yen against the dollar and surging oil prices, all
of which took place while Japanese markets were closed.
By midday the benchmark Nikkei <> was down 0.8 percent
or 115.73 points at 14,272.38. It had earlier touched 14,258.09,
its lowest since June 14, 2006.
The broader TOPIX index <> was down 0.8 percent at
1,389.95.
RETAILERS RETREAT, SHIPPERS SINK
Investors dumped retailers after a string of cuts in earnings
forecasts and poor results.
J.Front Retailing, the operator of Daimaru and Matsuzakaya
department stores, cut its annual operating profit forecast to 39
billion yen ($356.5 million) from 42.4 billion yen on weak
clothing sales, especially of women's clothing.
That followed an Thursday announcement by Seven & I that it
had cut its full-year forecast after quarterly profit slid 8.5
percent, hurt by its U.S. convenience store business and a slow
recovery in consumer spending at home. []
Casual-wear retailer Fast Retailing Co <9983.T>, which on
Thursday booked a 12 percent rise in first-quarter profit, fell
2.8 percent to 7,580 yen.
Mitsui O.S.K. Lines Ltd <9104.T> and other shipping firms
fell on concerns about a slowdown in the United States and the
fallout for emerging economies, whose growth has benefited the
sector.
Mitsui O.S.K. fell 3 percent to 1,307 yen, while Nippon Yusen
KK <9101.T> lost 2.5 percent to 826 yen and Kawasaki Kisen Kaisha
Ltd <9107.T> dropped 4 percent to 988 yen.
Trade was active, with 1.13 billion shares changing hands on
the first section of the Tokyo Stock Exchange compared with a
morning average of 724 million for the final week of December.
Declining shares outnumbered advancers by more than three to
one.
(Reporting by Elaine Lies, Editing by Michael Watson)
