Japanese shares dip, Toyota drops after earnings warning

TOKYO, May 12 (Reuters) - Japan's Nikkei share average .N225 slipped from a two-month high on Tuesday as concerns about further waves of coronavirus infections undermined recent optimism on economic re-openings.

Toyota Motor 7203.T , the biggest Japanese company by market cap, fell 2.0% after the automaker warned its operating profit will fall almost 80% in the current financial year. Nikkei share average .N225 ended down 0.12% at 20,366.48 points, a day after it hit a two-month high. It has risen 18.7% from a trough hit on March 19.

Investors' confidence has improved as more governments relax anti-virus measures and try to get economies back on their feet, but news of a rise infections in countries that had appeared to be containing the disease, such as China, South Korea and Germany, dented optimism.

Some market players noted the rally in the market has been based on expectations that the economy would quickly recover after a dismal April-June quarter, though many economists warn it could take much longer.

"When you think of earnings outlook and dire economic conditions, it is hard to expect the market to rise further from here," said Takuya Hozumi, global investment strategist at Mitsubishi UFJ Morgan Stanley (NYSE: MS ) Securities.

Highlighting the magnitude of the damage from the pandemic, the president of Toyota Motor told reporters its impact would be bigger than the 2008 global financial crisis. cyclical shares were badly hit.

Isetan Mitsukoshi Holdings 3099.T fell 8.7% after the department store operator posted a loss for the financial ended March.

Bridgestone 5108.T slipped 4.0% after the tyre maker posted a 65% fall in net profit for January-March, compared with a year earlier, and withdrew its annual forecast.

Kawasaki Heavy Industries 7012.T sank 5.7% as the firm halved its annual dividend to save cash.

Even sharper dividend cuts came from one real estate investment trust (REIT),

Invincible Investment 8963.T fell 22.7%, its daily limit, after the hotel REIT slashed its dividend by 98%.

The TSE's REIT index .TREIT dropped 2.2% from two-month high touched a day earlier on worries other funds may follow suit.

On the other hand, semi-conductor related shares were among the best performers on expectations of increased internet traffic after the coronavirus.

Sumco Corp 3436.T rose 3.3% and Advantest Corp 6857.T gained 2.3%.

Semiconductor manufacturing equipment maker Tokyo Seimitsu 7729.T rose 3.2% on strong earnings.

Square (NYSE: SQ ) Enix Holdings Co Ltd 9684.T rose 4.8% after the online entertainment company raised its profit estimate for the financial year ended March and hiked its dividend.

"I think the market is still retaining an uptrend," said Yuya Fukue, trader at Rheos Capital Works.

"At the same time, I expect the polarisation of the market to continue. The tech sector will flourish as it is becoming an important infrastructure for the society."

The broader Topix .TOPX fell 0.26% to 1,476.72.