Tokyo stocks improve on early losses

Tokyo stocks partly reversed early losses today when bargain-hunters stepped in but falls in chip-related issues such as Advantest…

Tokyo stocks partly reversed early losses today when bargain-hunters stepped in but falls in chip-related issues such as Advantest Corp kept the Nikkei in negative territory.

The Nikkei average was down 12.19 points or 0.11 percent at 10,610.13 after falling as low as 10,495.67.

The capital-weighted TOPIX index fared better, gaining 0.11 percent or 1.18 points to 1,030.23.

"There's no need for us to go over the cliff with US stocks. The Nikkei has very solid support at 10,000 and bargain-hunters flock in whenever we approach that," said Mr Masayoshi Yano, an investment information manager at Tokai Tokyo Securities.

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Accounting scandals, jitters over possible extremist attacks on the United States and a bleak outlook for corporate earnings sent the US Standard & Poor's 500 index to four-and-a-half year lows by Tuesday’s close.

In Tokyo, chip equipment maker Advantest shed 2.05 percent to 7,180 yen. Morgan Stanley cut its target price on Advantest's US rivals, Applied Materials and Cymer, prompting heavy losses in both stocks. Morgan Stanley cited an expected decline in customer capital spending.

Taking this as a cue to sell, investors also dumped Japanese chip equipment manufacturer Tokyo Electron, which fell 2.13 percent to 7,360 yen and touched a low of 7,290.

"Tokyo stocks may remain weak for the next few weeks. But after all the accounting hysteria in the US dies down investors should focus back on the fact that most Japanese companies forecast profits for the current year," said Mr Reiko Nakayama, head of the investment strategy department at Marusan Securities.

Tech shares were widely hit, with NEC, Japan's largest personal computer supplier, down 1.22 percent at 811 yen, after falling to 804.

Consumer electronics giant Sony shed 1.78 percent to 6,080 yen. But shares in companies that depend on domestic demand were solid.

A report about the government's urban redevelopment policies in the Nihon Keizai Shimbun provided a spark, traders said.

The government's Urban Renaissance Headquarters yesterday designated 17 areas nationwide for priority urban redevelopment under a new law aimed at encouraging the private sector to take the lead in urban renewal projects, the paper said.

Another bright spot was Fast Retailing, up 3.17 percent at 2,765 yen.

The low-cost casual-wear retailer said after the close on Tuesday that its same-store sales fell 33 percent in June from a year earlier, the ninth straight month of decline, but not as sharp as the 44.2 percent drop in May, its worst ever.

"I think Fast Retailing is almost through its worst stage. This month should be the worst," said Mr Dairo Murata, analyst at Credit Suisse First Boston.