Nikkei flat in choppy trade; investors pause after recent rally

  • Reuters
  • Stock Market News
Nikkei flat in choppy trade; investors pause after recent rally
Credit: © Reuters.

* Intel (NASDAQ: INTC ) capital expenditure cut hits chip-related shares

* Drugmakers fall on profit-taking

* Obayashi gains after raising earnings outlook

By Ayai Tomisawa

TOKYO, April 15 (Reuters) - Japan's Nikkei share average was flat on Wednesday as investors took profits on recent gainers such as drugmakers, but expectations that companies will report strong profits supported sentiment.

Japanese shares have risen this year on expectations that profits will be pushed up by a weak yen and that consumption will be helped by a slump in oil prices and higher wages.

Last week the Nikkei 225 .N225 traded above the psychologically important 20,000 mark for the first time since April 2000.

But traders said that after the euphoria of reaching that milestone, investors had paused to assess the trading environment.

The Nikkei was flat at 19,908.46 in mid-morning after trading in negative territory earlier. It had ended flat on Tuesday.

"Investors expect higher stocks in the long run, so they don't want to sell," said Mitsushige Akino, chief fund manager at Ichiyoshi Asset Management. "But they also don't see catalysts which can justify a level above 20,000 now."

Akino said that the Nikkei was likely to stay directionless for the time being.

"Analysts expect Japan Inc to post an average 15 percent rise in profits for the fiscal year through March 2016, but companies' tradition of announcing conservative outlooks should keep stocks down," he said.

Japanese companies will start reporting full-year earnings in May.

On Wednesday, drugmakers ran into profit-taking, with Shionogi & Co 4507.T dropping 2.5 percent and Eisai Co 4523.T shedding 1.1 percent after soaring 37 percent and 78 percent respectively this year.

Chip-related stocks took a hit after Intel said it would cut capital expenditure this year to $8.7 billion from $10 billion, a reduction that analysts said should improve free cash flow. ID:nL4N0XB5AJ

Tokyo Electron Ltd 8035.T dropped 1.4 percent and Advantest Corp 6758.T fell 1.0 percent.

Outperforming the market was contractor Obayashi Corp 1802.T , which rose 2.5 percent after it raised its earnings outlook for the year to March 2015. ID:nRSDj3ZSR

Data from China had little immediate impact. Its economy grew 7.0 percent in the first quarter - as expected, but still its slowest rate in six years. ID:nB9N0WZ01J

The broader Topix .TOPX was flat at 1,590.95 and the JPX-Nikkei Index 400 .JPXNK400 shed 0.1 percent to 14,430.46.

(Editing by Alan Raybould)

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