(Adds stocks, details)
By Elaine Lies
TOKYO, June 13 (Reuters) - The Nikkei stock average gave up
early gains to edge down 0.2 percent on Friday as risk-shy
investors worried about the results of a Group of Eight finance
ministers' meeting this weekend sold blue chips such as Hitachi
Ltd <6501.T>.
Shippers extended losses as a key freight index plunged,
while paper firms hit by the dollar's rise against the yen
tumbled, weighing on the market.
The global threat of inflation will take centre stage at this
weekend's meeting of Group of Eight (G8) finance ministers in
Japan, but measures to tackle it look elusive, and this has the
market worried, market players said.
"This weekend is likely to be very important for the
markets," said Masayoshi Okamoto, head of dealing at Jujiya
Securities, noting, among other things, recent moves by U.S.
officials to try and talk the dollar higher.
"As a result, nobody really wants to stay in possibly risky
shares, whether short-term day traders or longer-term players, so
people are lightening their holdings of big names and moving into
defensive shares like Japan Tobacco."
Although New York shares rose on stronger-than-expected U.S.
retail sales for May, Tokyo market players ultimately shrugged
off the numbers as a one-time benefit from tax rebates and said
boosts from this would be temporary at best.
Short-covering ahead of the settlement of Nikkei futures and
options contracts expiring in June, known in Japan as the
so-called special quotation or "SQ", boosted the market in early
trade but evaporated as the morning wore on.
The contracts likely settled at 14,053.03, market
participants said. The closely watched settlement price is
calculated from the opening prices of the 225 shares in the
Nikkei average <> on the second Friday of the month.
The benchmark Nikkei shed 22.31 points to 13,866.29, while
the broader Topix <> sank 0.5 percent to 1,356.49.
SHIPPERS SINK, PAPER POUNDED
Shipping firms extended losses as a major sea freight rate
index fell sharply, with the subindex <.ISHIP.T> down 13 percent
this week after sustained strong rises.
Mitsui OSK Lines Ltd <9104.T> shed 3.3 percent to 1,393 yen,
Kawasaki Kisen Kaisha Ltd <9107.T> declined 3.8 percent to 996
yen and Nippon Yusen KK <9101.T> skidded 2.4 percent to 957 yen.
The Baltic Exchange's dry freight index <.BADI>, which gauges
the strength of seaborne trade for dry commodities such as coal,
iron ore and grains, fell 8.7 percent, down for a fifth straight
session.
Some in the market also view shippers as a leading indicator
of market moves and said that high oil prices were starting to
hit the sector hard.
Paper shares tumbled due to rising costs as a result of the
weaker yen <JPY=>.
Oji Paper Co Ltd <3861.T> slid 5.1 percent to 504 yen,
Mitsubishi Paper <3864.T> fell 5 percent to 264 yen and Nippon
Paper Group Inc <3893.T> also fell 5 percent, to 285,000 yen.
Hitachi slipped 1 percent to 759 yen and Toyota Motor
<7203.T> edged down 0.6 percent to 5,370 yen. Canon Inc <7751.T>
slid 0.6 percent to 5,360 yen.
Trade was active, buoyed by moves in connection with the
settlement of futures and options. Two billion shares changed
hands on the Tokyo exchange's first section, compared with last
week's morning average of 1.1 billion.
Declining stocks outpaced advancers by more than 4 to 1.
(Reporting by Elaine Lies; Editing by Chris Gallagher)
