* Nikkei erases gains, China policy worry weighs -analyst
* Foreign orders before trade show 5th day of selling
* RSI close to oversold, support at 200-day MA near 10,300
* Toyota, Hitachi among gainers on upbeat earnings
By Aiko Hayashi
TOKYO, May 12 (Reuters) - Japan's Nikkei average slipped 0.4
percent on Wednesday, erasing earlier gains as concerns about the
euro zone's debt woes continued to weigh on market confidence
even after a $1 trillion European rescue package
Construction machinery maker Komatsu Ltd <6301.T> and shares
of other companies that depend on Chinese demand fell amid signs
of mounting inflationary pressure in China, which is seen
pointing to further policy tightening by Beijing, market players
said. Shanghai stocks <> were down 1.4 percent.
Some market players said a fall in U.S. futures <SPc1> also
weighed on the market following a Wall Street Journal report that
U.S. federal prosecutors are investigating whether Morgan Stanley
misled investors about mortgage-derivative deals it helped design
and sometimes bet against. []
The benchmark Nikkei eked out small gains earlier in the day,
helped by a forecast-beating quarterly profit from Toyota Motor
Corp <7203.T> and an upbeat growth forecast from electronics
conglomerate Hitachi Ltd <6501.T>.
"Aside from the problems in Europe, investors in Japan are
particularly paying attention to the outlook for the Chinese
economy. There are concerns that policy tightening in the face of
higher prices would be overdone there," said Tsuyoshi Segawa, an
equity strategist at Mizuho Securities.
"But earnings haven't been bad, and I don't expect the market
will lose too much ground at this point."
The benchmark Nikkei <> fell 43.29 points to 10,367.81,
after rising nearly 1 percent at one stage.
The broader Topix <> dipped 0.1 percent to 930.97.
Support was expected to solidify around 10,300, just below
the Nikkei's 200-day moving average, with the Nikkei's relative
strength index (RSI) at around 36. Anything from 30 and below is
regarded as oversold.
Still, orders for Japanese stocks placed through 10 foreign
securities houses before the start of trade on Wednesday showed
selling for a fifth straight day. []
"Since the start of this month, foreigners have really been
selling Japanese stocks, partly because Japanese markets were
closed for holidays and foreign markets fell during that time,
and partly because the Greek debt crisis really worsened," said
Hideyuki Ishiguro, a strategist at Okasan Securities.
"At this point, I don't think a lot of this money is flowing
into other Asian share markets. It's probably going into U.S.
Treasury bonds and gold as part of a shift from riskier assets."
MACHINERY MAKERS DOWN, TOYOTA CLIMBS
Shares of companies with exposure to China fell on a
combination of worries about Chinese monetary tightening and a
fall in Shanghai shares <>.
Machinery maker Komatsu <6301.T> fell 1.6 percent to 1,707
yen and shipper Kawasaki Kisen <9107.T> slid 3 percent to 358
yen. Hitachi Construction <6305.T> lost 2.7 percent to 1,837 yen.
China's consumer price inflation pushed up to an 18-month
high of 2.8 percent in April from a year earlier and banks' new
lending topped expectations, although overall monthly data showed
the economy was not overheating. []
Chinese property prices in 70 cities rose 12.8 percent in
April from a year earlier, the fastest pace on record.
[]
But Toyota's shares rose 2.3 percent to 3,575 yen. The
world's largest automaker comfortably beat forecasts with a
fourth-quarter profit as it cut costs and its aggressive sales
incentives swiftly drew U.S. customers back to its popular Prius
hybrid and Corolla sedans in the wake of its recall problems.
[]
Hitachi Ltd <6501.T> jumped 4.2 percent to 398 yen after
Japan's largest electronics conglomerate swung back to
profitability in the latest quarter on a pickup in demand and
cost cuts, and forecast stronger-than-expected growth this year.
NTT Data Corp <9613.T> surged 9.8 percent to 354,500 yen
after the company's forecast beat expectations and UBS upgraded
it to "buy" from "neutral", with analyst Sumito Takeda citing
cost cuts and management plans to improve group profitability.
Sumitomo Metal Mining <5713.T> gained 3 percent to 1,363 yen
after gold jumped nearly 3 percent to an all-time high at above
$1,230 an ounce on Tuesday.
(Additional reporting by Elaine Lies; Editing by Joseph Radford)
