* Pause in gains inevitable as earnings priced in - analyst
* Falls broad, but Uny up on Itochu's plan to take stake
* JAL drops on report of bigger loss, KDDI falls on downgrade
By Aiko Hayashi
TOKYO, Oct 22 (Reuters) - Japan's Nikkei average fell 1.2
percent on Thursday, with stocks hit across the board after a
warning from a banking analyst prompted a sell-off in U.S.
financial shares.
Amid caution ahead of the upcoming Japanese earnings season,
exporters such as Kyocera Corp <6971.T> as well as banking stocks
shed recent gains.
Japan Airlines Corp (JAL) <9205.T> dropped after a newspaper
reported that the company's net loss may balloon to as much as
about $5.5 billion for the year ending in March, while KDDI Corp
<9433.T> slid after a brokerage downgrade.
"The stock market is taking a breather. Earnings reports have
been in line or above expectations, but the stock market has
already factored that in and climbed to high levels," said
Kenichi Hirano, operating officer at Tachibana Securities.
"We'll have to be careful that positive factors might not be
reflected in stock moves 100 percent from now on."
In moderate trade, the benchmark Nikkei <> slipped
122.61 points to 10,210.78. It hit a three-week closing high on
Tuesday.
The broader Topix <> fell 1.3 percent to 901.68.
Japan's earnings season will swing into full gear next week.
"The market lacks energy and there are few reasons to buy
Japanese stocks, particularly because the new government's
policies have yielded little results so far," said Hiroichi
Nishi, general manager of equity marketing at Nikko Cordial
Securities.
"But at the same time, falls should be limited as the global
economy is on track for a recovery and global stocks are on an
upward trend. Investors also want to see how Japanese earnings
will pan out."
U.S. stocks fell on Wednesday as Wells Fargo <WFC.N> slid
after Rochdale Research analyst Richard Bove cut his rating on
the stock saying loan losses were mounting, though it was among
several banks posting quarterly earnings above Wall Street's
forecasts. [] []
EXPORTERS DRAG
Kyocera slipped 1.5 percent to 8,010 yen, while Advantest
Corp <6857.T> fell 1.7 percent to 2,365 yen and Tokyo Electron
Ltd <8035.T> shed 0.9 percent to 5,630 yen.
Banking stocks fell, with Japan's top lender Mitsubishi UFJ
Financial Group <8306.T> skidding 3.1 percent to 472 yen.
JAL shares fell 2.4 percent to 123 yen. The Yomiuri newspaper
said the struggling carrier plans to book hefty restructuring
charges, which would likely lead to a bigger loss.
The Nikkei business daily also reported that a
government-appointed task force crafting a revival plan for JAL
has asked the Development Bank of Japan to provide more than 50
billion yen ($550 million) in debt waivers and debt-for-equity
swaps. []
KDDI fell 3 percent to 489,000 yen after Citigroup Global
Markets Japan cut its rating on Japan's No. 2 phone operator to
"hold/medium risk" from "buy/medium risk" and lowered its target
price to 550,000 yen from 650,000 yen.
Analyst Hiroshi Yamashina said he saw little in the way of
share price catalysts.
But retailer Uny <8270.T> gained 2.3 percent to 669 yen after
the company said trading house Itochu <8001.T> is planning to
take a stake in it as part of a business tie-up.
The Nikkei business daily said Itochu plans to spend about 4
billion yen to acquire a 3 percent stake from the market. Uny
said it plans a news conference later in the day.
Some 982 million shares changed hands on the Tokyo exchange's
first section, roughly in line with last week's morning average
of 956 million.
Declining stocks outnumbered advancing ones by more than 6 to
1.
(Editing by Chris Gallagher)
