* Pioneer soars on news it may apply for state funds
* Elpida surges on report it is likely to seek public money
* Banks fall ahead of U.S. stress test results
By Aiko Hayashi
TOKYO, April 22 (Reuters) - Japan's Nikkei average was flat
on Wednesday, with Pioneer Corp <6773.T> soaring on news that it
may apply for state funds but banking shares falling on investor
caution ahead of the results of U.S bank stress tests.
Elpida Memory <6665.T> surged 18 percent after the Nikkei
business daily said the world's No.3 DRAM maker is expected to
seek around 50 billion yen ($507 million) in public money to
shore up its finances. []
But Mitsui Chemicals <4183.T> dropped 3.6 percent after it
widened its net loss estimate for the past financial year to 95
billion yen from an earlier projection of a 13 billion yen loss,
citing a severe business environment.
The market initially rose after a rebound on Wall Street
sparked by remarks by Treasury Secretary Timothy Geithner that
most U.S. banks have enough capital to keep lending. []
However, market participants are still eager to hear the
outcome of the Obama administration's stress tests, assessing the
ability of the largest 19 banks in the United States to cope with
potential strains, on May 4.
"Before making any big moves, investors want to hear the
announcement on May 4. Until then, it's hard to see a clear
direction in the financial markets," said Masayoshi Okamoto, head
of dealing at Jujiya Securities.
The benchmark Nikkei <> dipped 0.02 percent to 8,709.63,
after spending most of the morning in slightly positive
territory.
It slid 2.4 percent the previous day to book its lowest close
since April 8, following a rally of almost 30 percent since early
March, most recently fuelled by optimism about earnings at
Citigroup <C.N> and other U.S. banks.
The broader Topix <.TOPIX> fell 0.2 percent to 829.00.
Analysts said the market also initially rose on a technical
rebound after recent sharp rallies, but that investors were
holding back ahead of the peak of earnings season in the U.S. and
Japan.
On Tuesday, U.S. stocks climbed, with financials the
best-performing sector in the broad Standard & Poor's 500 Index
<.SPX>. Worries that U.S government stress tests would reveal
deep flaws in bank balance sheets had dragged down stocks the day
before. []
PIONEER, ELPIDA SHOOT UP
"Investors are cheering public funds reports for companies
such as Pioneer as the risk of bankruptcies may be reduced," said
Kazuhiro Takahashi, general manager at Daiwa Securities SMBC.
"But it's not all positive because there's a possibility that
getting public funds could make future mergers and acquisitions
more difficult as paying back this money will be a priority."
Pioneer shares soared 19.6 percent to 329 yen after two
sources close to the matter said on Tuesday the Japanese
electronics maker is considering applying for state funds to
shore up its capital. []
Elpida surged to 1,284 yen.
But shares of Mitsui Chemicals declined to 321 yen.
Banking shares fell, with Japan's top lender Mitsubishi UFJ
Financial Group <8306.T> slipping 1.4 percent to 484 yen.
No.2 bank Mizuho Financial Group <8411.T> dipped 0.5 percent
to 194 yen and third-ranked Sumitomo Mitsui Financial Group
<8316.T> shed 0.5 percent to 2,965 yen.
Among exporters, shares of Honda Motor <7267.T> reversed
course to fall 0.2 percent to 2,725 yen.
Honda initially rose after the Nikkei business daily said the
automaker's operating profit for the last financial year is
likely to come in about 10 billion yen higher than its previous
estimate, thanks to a weaker yen and better-than-expected sales
in China. []
Trade was moderate on the Tokyo exchange's first section,
with 1.25 billion shares changing hands, roughly equaling last
week's morning average.
Declining stocks outnumbered advancing ones, 990 to 543.
(Editing by Joseph Radford)
