* Nikkei sheds early gains on persisting economy concerns
* Exporters dragged lower as investors fret over stronger yen
* Shift into defensive stocks limits Nikkei's losses
By Shinichi Saoshiro
TOKYO, July 7 (Reuters) - Japan's Nikkei average dipped 0.2
percent on Tuesday, giving back earlier gains on persisting
concerns about an economic recovery, with exporters dragged lower
by worries over a strengthening yen.
Oil and gas developer Inpex Corp <1605.T> shed 1.3 percent
after oil prices <CLc1> lost 4 percent on Monday on doubts over a
potential rebound in the global economy.
"Optimism previously shown towards the economy is being
scaled back and this is putting a lid on the market. Last week's
U.S. employment numbers were a hint that perhaps the market had
become overoptimistic," said Takahiko Murai, general manager of
equities at Nozomi Securities.
Data on Thursday showed employers in the United States shed
nearly half a million jobs in June with the unemployment rate
jumping to 9.5 percent, the highest in nearly 26 years.
[]
The benchmark Nikkei <> was down 20.94 points at
9,659.93 at the midday break. It initially rose 0.6 percent
following gains on Wall Street the previous day.
The Nikkei was on track to remain below its 25-day moving
average, around 9,800, for a third straight day.
The index has lost momentum after reaching an eight-month
high of 10,170.82 last month.
"The market wants to gauge economic indicators and corporate
results as recent gains appeared to have outpaced actual economic
conditions," said Hiroichi Nishi, general manager of equity
marketing at Nikko Cordial Securities.
Investors will be eyeing upcoming U.S. corporate earnings
including bellwethers Alcoa <AA.N> and Chevron <CVX.N>. []
The broader Topix <> shed 0.2 percent to 910.22.
DEFENSIVES LIMIT LOSSES
Exporters slid after the dollar hit a five-week low below 95
yen <JPY=> the previous day. Canon Inc <7751.T> fell 1 percent to
3,050 yen and electronics parts maker TDK Corp <6762.T> lost 1.6
percent to 4,280 yen. Honda Motor Co <7267.T> shed 1.6 percent to
2,540 yen.
Resource-linked shares were also hurt by clouded prospects of
a global economic recovery. Non-ferrous metals smelters Nippon
Light Metal <5701.T> fell 4 percent to 97 yen and Mitsui Mining
and Smelting <5706.T> dropped 1.7 percent to 230 yen.
The non-ferrous metals subindex <.INFRO.T> fell 2.4 percent,
posting the biggest drop among the subindexes.
Market players said the Nikkei's downside was limited by
investors shifting funds into defensive stocks such as
drugmakers, considered resilient amid unfavourable economic
conditions.
Astellas Pharma Inc <4503.T>, Japan's second-biggest
drugmaker, rose 1.5 percent to 3,370 yen and Takeda
Pharmaceutical <4502.T> edged up 0.3 percent to 3,720 yen.
East Japan Railway <9020.T> rose 2.7 percent to 6,090 yen and
Kao Corp <4452.T>, Japan's biggest maker of toiletries, edged up
0.5 percent to 2,110 yen.
Among other gainers, Asahi Breweries <2502.T> climbed 4
percent to 1,367 yen after the Nikkei business daily said the
brewer likely beat its January-June pretax profit forecast by
around 1 billion yen thanks to rising sales of no-malt beers and
soft drinks.
Shares of Toyota Motor Corp <7203.T> dipped 0.6 percent to
3,590 yen while Isuzu Motors Ltd <7202.T> lost 5.2 percent to 147
yen, after the Nikkei business daily said Toyota has decided to
scrap plans to develop diesel engines with Isuzu in what is
likely to be the first of a series of restructuring measures
under new management. []
Inpex lost 1.3 percent to 704,000 yen.
Trade picked up on the Tokyo exchange's first section, with
966 million shares changing hands, compared with last week's
morning average of 955 million.
Advancing stocks outnumbered declining ones 800 to 772.
(Editing by Chris Gallagher)
