*Nikkei falls 2.2 percent, led down by TDK
*NEC plunges after sharp drop in earnings
*Banks suffer after decline in quarterly profits
(Adds stocks and comments)
By Taiga Uranaka
TOKYO, Aug 1 (Reuters) - The Nikkei average fell 2.2 percent
on Friday, as electronics maker NEC Corp <6701.T> plunged 14
percent on a sharp drop in quarterly earnings and a ratings cut
by a brokerage, while banks slid on sharp profit declines.
Electronics device maker TDK Corp <6762.T> also tumbled after
cutting its outlook following a sharp fall in quarterly profit,
and announcing plans to buy German electronic parts manufacturer
Epcos AG <EPCGn.DE> for $1.9 billion in cash. []
Investors were also cautious ahead of a U.S. July employment
report later in the day after U.S. data showing
weaker-than-expected growth and a rise in the number of Americans
applying for jobless benefits, rekindled worries about the health
of the world's largest economy.
"The global economic outlook is deteriorating and corporate
earnings are also getting worse -- together they are creating
selling pressure," said Yoku Ihara, manager at investment
information department at Retela Crea Securities.
The benchmark Nikkei <> ended the morning down 295.88
points at 13,080.93. The broader Topix <> lost 2.4 percent
to 1,271.95.
"The number of companies cutting their profit outlooks is a
little bit bigger than I thought," said Junichi Misawa, executive
officer at STB Asset Management.
"Companies had factored in rises in raw materials costs in
their outlooks and the question had been to what extent they
could pass that on in their selling prices. But in addition to
that, a slowdown in demand is emerging, eating into their
profits," he said.
As of Thursday, of 560 firms listed on the Tokyo Stock
Exchange's first section that had announced first-quarter
April-June results, and 61 firms or 11 percent had cut their
full-year forecast, data by Shinko Research Institute shows.
NEC PLUNGES
NEC fell to 508 yen, heading for its biggest daily percentage
loss in more than 20 years.
It reported a 64 percent fall in its quarterly operating
profit due to slow sales of network equipment and an increase in
cellphone development costs. [] UBS lowered its rating
on the stock to "neutral" from "buy" after the earnings.
TDK slid 6 percent to 6,110 yen, becoming the biggest drag on
the Nikkei after posting a 72 percent fall in group net profit
for the three months ended June 30, and cutting its annual
forecast by 15 percent to 55 billion yen.
Financial shares were also hit after Mizuho Financial Group
<8411.T> and Sumitomo Mitsui Financial Group <8316.T> posted
sharp declines in first-quarter core profitability, hurt by the
global market downturn and a weakening domestic economy.
[]
Mizuho fell 3.6 percent to 507,000 yen and Sumitomo Mitsui
lost 7 percent to 789,000 yen.
Sharp Corp <6753.T> tumbled 5.2 percent to 1,428 yen after
posting a 14 percent fall in quarterly profit on Thursday, hit by
slower mobile phone sales. []
Japan's corporate earnings season is in full swing, with
Nissan Motor <7201.T> and Astellas Pharma <4503.T> among major
firms due to announce results later in the day.
Trade picked up, with 941 million shares changing hands,
compared with last week's morning average of 851 million.
Declining shares beat advancing ones by nearly six to one.
