TOKYO (Thomson Financial) - Tokyo shares ended the Wednesday morning session sharply lower after lackluster June quarter earnings by US firms Intel and Yahoo weighed on sentiment locally.
The situation was made worse by deepening worries over the problematic US sub-prime mortgage market after Bear Stearns said assets from two of its flagship hedge funds that have invested in the home mortgage market are now almost worthless.
The blue-chip Nikkei 225 Stock Average ended the morning session down 207.36 points, or 1.14 percent, at 18,009.91, off a low of 17,964.28 and a high of 18,136.06.
The TOPIX index of all issues listed on the first section of the Tokyo Stock Exchange was down 19.05 points, or 1.07 percent, at 1,759.06, off a low of 1,752.89 and a high of 1,772.12.
Decliners beat gainers 1,331 to 270 on the TSE first section, with 126 issues unchanged.
Volume rose to an estimated 1.17 billion shares from 1.03 billion Tuesday morning.
'Despite the Dow's record high overnight, Tokyo share prices sagged due to the disappointing earnings from Intel and Yahoo,' said Ryuta Otsuka, strategist at Toyo Securities.
Overnight, the Dow industrials crossed 14,000 points for the first time following tame wholesale inflation data in the US.
The Dow closed below that level but managed another record finish, while the other stock indicators were mixed.
Intel announced net income for the three months to June of 22 cents per share, up from 15 in the year ago term, but stripping out one-off gains, earnings per share was only 19 cents, the average forecast of analysts surveyed by Thomson Financial.
After gaining in the regular US session Tuesday, the stock fell more than 4 percent in after-hours trading.
Internet search engine Yahoo reported a 2 percent year-on-year drop in second quarter net income and issued a downbeat full year earnings guidance, below its April estimate. The stock also fell in after hours trading.
Market participants remained cautious as more US companies like IBM and Microsoft are expected to report their quarterly results this week, while major Japanese firms will announce their earnings starting next week.
'Investors tend to take leads from overseas as there are little domestic incentives before the first fiscal quarter earnings results,' Otsuka said.
Technology shares were lower following Intel's earnings results.
Tokyo Electron fell 120 yen or 1.3 percent to 8,900, Elpida Memory declined 90 yen or 1.6 percent to 5,690, NEC Electronics was down 50 yen or 1.3 percent at 3,650 and Fanuc was lower 250 yen or 1.9 percent at 13,170.
Honda Motor lost 40 yen or 0.9 percent to 4,480. The automaker said it plans to spend 100 million US dollars on a new automobile production plant in Argentina to meet growing demand in South America.
Among other automakers, Suzuki Motor lost 120 yen or 3.4 percent to 3,390, Nissan Motor shed 11 yen or 0.8 percent to 1,309 and Toyota Motor dipped 120 yen or 1.6 percent to 7,440.
(1 US dollar = 121.85 yen)
kaori.kaneko@thomson.com
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