Nikkei pares losses, U.S. bank plans boost financials

TOKYO (Reuters) - Japan's Nikkei stock market average was down 0.2 percent on Wednesday, paring early losses, as Nomura Holdings Inc and other financial stocks climbed on hopes that planned investments in U.S. banks would help the sector.

Sumitomo Mitsui Financial Group (SMFG) rose after media reports said Japan's third-largest bank planned to invest in U.S. investment bank Goldman Sachs, though a spokeswoman for SMFG said the bank did not have such plans at this time. But investor worries about possible delays to a proposed $700 billion plan to rescue the U.S. financial sector, plus concern about the overall health of the global economy, were likely to keep any recovery limited. "Even if the U.S. financial situation is cleared up, worry about the underlying health of the economy will remain, especially given that economic weakness is growing in Europe," said Masayuki Yamagishi, a strategist with Mitsubishi UFJ Securities.

"Investors are still wondering how much real impact the U.S. government rescue plan will have, plus it still hasn't been approved by Congress."





Defensive shares, such as pharmaceuticals and food companies, were doing comparatively well as a result, helping to support the overall market, he added.

By 0447 GMT the Nikkei had lost 19.29 points to 12,071.30. The broader Topix was down 0.5 percent at 1,163.33 after earlier falling more than 2 percent.

Nomura, Japan's largest broker, surged 6.3 percent to 1,522 yen after the company said it would buy the Asian and European operations of failed U.S. investment bank Lehman Brothers to help it expand overseas.

Mitsubishi UFJ Financial Group extended gains to 4.9 percent and 941 yen after Japan's largest bank said it would take a stake in U.S. investment bank Morgan Stanley.

The securities sub-index was the top gainer among the sub-indices, rising 3.5 percent.





Eisai Co Ltd rose 4 percent to 4,120 yen, among many pharmaceuticals helping to lift the Nikkei. Shionogi & Co Ltd gained 6.2 percent to 2,245 yen.

Takeda Pharmaceutical Co was up 1.7 percent after saying on Wednesday it had applied for approval to market in the United States the SYR-322 and the Actos diabetes drugs in a single tablet for the treatment of type 2 diabetes.