* Nikkei moves narrowly, briefly turns positive
* High U.S. bond yields stifle exporters
* Nippon Steel up after report of capacity increase
* Japan Tobacco slides after tax hike comments
By Elaine Lies
TOKYO, May 28 (Reuters) - Japan's Nikkei stock average edged
down 0.1 percent in choppy trade on Thursday, with losses in
exporters such as Sony Corp <6758.T> on concern about the U.S.
economy outweighing support from shippers and auto shares.
Japan Tobacco <2914.T> slipped 5.2 percent, becoming the
largest percentage loser on the Nikkei 225, after an official
from Japan's largest opposition party told Reuters in an
interview that it would raise tobacco taxes with the goal of
halving the number of smokers nationwide if it wins the next
election. []
But Nippon Steel <5401.T> and auto shares gained after the
Nikkei business daily said the steelmaker planned to raise its
capacity utilisation rate from the current 50 percent to 60 to 70
percent as early as July on expectations of a recovery in demand
from carmakers and others.[]
Wall Street fell on Wednesday as bond yields rose, raising
fears this could stifle a nascent U.S. economic recovery by
leading to increased borrowing costs for consumers and
corporations. []
But analysts said the impact on Tokyo at this point was
limited by increasingly bright signs in economies around the
world, adding that while U.S. stocks and bond prices both fell,
the dollar was climbing against the yen. <JPY=>
In the absence of fresh factors, investors are looking ahead
to Japanese industrial output data due on Friday and the fate of
General Motors.
"Though the chances of GM going into Chapter 11 are quite
high, the market is currently watching the long-term direction of
the economy even more," said Masayoshi Yano, senior market
analyst at Meiwa Securities.
The benchmark Nikkei <> shed 7.85 points to 9,430.92
after brief forays into positive territory, while the broader
Topix <> edged up 0.1 percent at 893.61.
Industrial output for April and forecasts for May and June,
are due out just before the market opens on Friday, along with a
slew of other data including the consumer price index.
"The industrial output figures are widely expected to be
good, and this is making investors reluctant to sell today given
that tomorrow could see strong gains depending on the numbers,"
said Masayoshi Okamoto, head of trading at Jujiya Securities.
Others agreed that the market's recent repeated failures to
top this year's high of 9,503.91, most recently on Wednesday,
show fresh impetus is needed to move higher.
"GM is weighing a bit, but more than that, the market simply
needs to consolidate its gains at this level a bit more while
trying to figure out which direction to take," said Yoku Ihara,
manager at the investment information department of Retela Crea
Securities.
"It's dithering a bit, trying to decide which way to go."
MIXED BAG
Shares tended to move more on company-specific factors,
meaning that while many exporters lost some ground, others edged
higher.
Sony lost 0.4 percent to 2,465 yen and Nikon <7731.T> lost
1.2 percent to 1,379 yen. Canon Inc <7751.T> slipped 0.6 percent
to 3,150 yen.
But TDK Corp <6762.T> rose 1.7 percent and Panasonic <6752.T>
rose 0.7 percent to 1,357 yen.
Nippon Steel gained 1.7 percent to 358 yen and autos
followed, with Toyota Motor Corp <7203.T> up 1.9 percent to 3,770
yen and Honda Motor Co <7267.T> gaining 1.1 percent to 2,750 yen.
The autos sub-index <.ITEQP.T> rose 1.7 percent, becoming the
second-biggest gainer among the sub-indexes.
Shippers were buoyed by increasing commodities demand in the
wake of a jump in a key freight index.
Mitsui O.S.K. Lines <9104.T> rose 1.4 percent to 640 yen
after the Baltic Dry Exchange <.BADI> extended gains by 7.6
percent, with fellow shipper Kawasaki Kisen <9107.T> up 0.8
percent. Nippon Yusen <9101.T> edged up 0.7 percent to 433 yen.
But Japan Tobacco dropped 5.2 percent to 271,900 yen after
the opposition's comments on raising tobacco tax. Under the
current tax system, tobacco tax accounts for nearly 60 percent of
the price of a packet of cigarettes, or 174.88 yen of a 300 yen
($3.15) pack.
In a note to clients Goldman Sachs said that while it was
uncertain whether the Democratic Party of Japan would be able to
push through such a tax hike the possibility of "sharp tax
increases needs to be recognised as a risk factor when investing
in the company".
Trade was steady with 1 billion shares changing hands on the
Tokyo exchange's first section, the same as last week's morning
average.
Advancing shares outnumbered declining ones by 948 to 570.
(Reporting by Elaine Lies; Editing by Joseph Radford)
