*Nikkei falls 0.6 percent despite opening higher
*Komatsu, Denso drag down the market after earnings
*Defensive stocks in favour amid global economic worry
(Adds details)
By Aiko Hayashi
TOKYO, July 31 (Reuters) - The Nikkei average fell 0.6
percent on Thursday, dragged lower by Komatsu Ltd <6301.T> and
and Denso <6902.T> as investors punished companies with
disappointing earnings which sparked concerns about the broader
economic outlook.
But investors picked up stocks more reliant on the domestic
economy such as Fast Retailing Co <9983.T> amid fears of a global
economic slowdown, while energy-linked shares rose on a jump in
oil prices.
"The focus of trade is shifting toward defensive sectors or
stocks that are less affected by external factors, rather than
those of a cyclical nature," said Takahiko Murai, general manager
of equities at Nozomi Securities.
"Komatsu's earnings rather shocked the market. Komatsu, which
is supported by demand in emerging countries, was a bellwether
cyclical stock. Investors were forced to admit that the global
economy had slowed more than expected."
Construction machinery maker Komatsu booked a 2 percent gain
in quarterly profit on Tuesday, but slashed its unit-based demand
forecast for the U.S., European and Japanese markets.
The benchmark Nikkei <> shed 78.93 points to end the
morning session at 13,288.86, while the broader Topix <>
declined 1 percent to 1,290.37.
U.S. stocks rose on Wednesday as a surprising increase in
private-sector employment and central bank efforts to boost
liquidity in stormy financial markets offset a surge in oil
prices. []
Masayoshi Okamoto, head of dealing at Jujiya Securities, said
investors are turning sour on exporters as they expect the U.S.
and European economies will further erode in the latter half of
this year.
"Stock prices are already reflecting the view that the
situations there will worsen in the latter half," he said.
DENSO, KOMATSU DOWN
Denso shares plunged 7.8 percent to 2,775 yen, and has lost
11.6 percent since the world's top auto parts supplier reported
on Wednesday a more than 20 percent fall in quarterly profits --
considerably worse than expectations.
It also slashed its forecasts as big cuts in North American
vehicle production take their toll. []
Mitsubishi UFJ Securities cut its rating on the stock to "3"
from "2," citing the risk of a further downward revision to the
firm's forecast given that Toyota Motor Corp <7203.T> has cut its
2008 global sales target.
Komatsu dropped 4 percent to 2,670 yen.
Other exporters fell, with Toyota down 2.3 percent at 4,660
yen and industrial robot maker Fanuc Ltd <6954.T> losing 1.5
percent to 8,730 yen.
Fast Retailing rose 0.7 percent to 12,160 yen, while Japan's
largest retailer Seven & I Holdings <3382.T> gained 3.2 percent
to 3,260 yen.
Energy-related shares rose after oil <CLc1> jumped more than
$4 a barrel on Wednesday. U.S. government data showed an
unexpected drop in gasoline stocks as suppliers facing weak
consumer demand cut production and imports.
Oil and gas field developer Inpex Holdings <1605.T> added 1.1
percent to 1.08 million yen.
Trade was moderate on the Tokyo exchange's first section,
with 879 million shares changing hands, compared with last week's
morning average of 851 million.
Declining shares beat advancing ones by 939 to 653.
(Reporting by Aiko Hayashi; editing by Edwina Gibbs)
