*Nikkei falls 0.6 percent, banks decline sharply
*Bleak outlook for domestic economy weighs on market
*Toyota up after keeping outlook, attracting bargain hunters
(Adds stocks and comments)
By Taiga Uranaka
TOKYO, Aug 8 (Reuters) - Japan's Nikkei stock average fell
0.6 percent on Friday, with banks such as Mitsubishi UFJ
Financial Group <8306.T> suffering sharp declines due to the
bleak outlook for the domestic economy.
But Toyota Motor Co <7203.T> rose after the world's biggest
automaker kept its forecasts unchanged despite posting a 28
percent drop in quarterly net profit on a strong yen and slumping
U.S. sales. []
Tokyo cut its view on the economy on Thursday, dropping the
word "recovery" in a key monthly report for the first time in
nearly five years as raw material costs and a global slowdown
push the world's No. 2 economy towards a recession. []
"As the government report said, the Japanese economy has been
deteriorating, and in such an environment investors cannot buy
domestic demand-oriented stocks and banks," said Kenichi Hirano,
operating officer at Tachibana Securities.
The benchmark Nikkei <> ended the morning down 74.03
points at 13,050.96, while the broader Topix <> lost 0.9
percent to 1,247.85.
"As the government acknowledged a slowdown in the Japanese
economy, investors are hesitant to buy, though there is some
bargain hunting when the market dips below key levels," said
Katsuhiko Kodama, senior strategist at Toyo Securities.
"There are expectations that the government will implement
stimulus measures, but again, we have to wait a little more to
see what they will be like," he said.
BANKS DOWN
Toyota rose 3.9 percent to 4,760 yen, making it one of the
biggest positive contributors to the Nikkei as investors, who had
been dumping its shares recently, decided that the bad news for
the automaker has run its course for now.
"Toyota shares had been oversold. And they are attracting
bargain hunters after the bad news was out," said Yoshihiro Ito,
senior strategist at Okasan Asset Management.
Banks fell as deteriorating economic conditions raised
concerns about a decline in demand for bank loans and increases
in provisions against any loans souring.
Top lender Mitsubishi UFJ plunged 5 percent to 826 yen and
No. 2 Mizuho Financial Group <8411.T> fell 1.9 percent to 467,000
yen.
Japan's three major shippers dropped after UBS cut its rating
on them to "neutral" from "buy", citing new downside risks for
container profits and a peaking out of dry bulk markets.
Mitsui OSK Lines Ltd <9104.T> fell 6.7 percent to 1,190 yen,
Nippon Yusen KK <9101.T> dropped 3.5 percent to 840 yen and
Kawasaki Kisen Kaisha Ltd <9107.T> declined 4.6 percent to 713
yen.
Trade picked up, due partly to trades in connection with the
settlement of index options, with 1.15 billion shares changing
hands, compared with last week's morning average of 834 million.
Declining shares beat advancing ones by more than two to one.
(Editing by Chris Gallagher)
