Nikkei drops on Iraq worries; chip-related shares surge on Intel
* Semiconductor-related shares surge on Intel's bright outlook * Rising oil prices cast concern on corporate profits - analysts By Ayai Tomisawa TOKYO, June 16 (Reuters) - Japan's Nikkei share average dropped on Monday morning as an insurgency in Iraq kept investors on edge, while chip-related stocks outperformed on Intel Corp's rosy outlook. The Nikkei fell 0.4 percent to 15,038.13 in midmorning trade, moving away from a three-month high of 15,206 hit a week ago. The downside was partially offset by a strong performance in chip-related firms. Advantest Corp gained 2.2 percent, Tokyo Electron Ltd soared 2.6 percent and Sumco Corp surged 2.1 percent after Intel raised its full-year revenue outlook, citing stronger-than-expected demand for personal computers used by businesses. On the whole, investors were generally cautious amid worries geopolitical tensions in the Middle East and Ukraine could lead to a protracted period of high commodity prices, and hurt economic growth and companies' profits. "Investors aren't expecting material costs will rise soon and will have an immediate impact on companies' profits, but they are wary of these risks in the longer run," said Hikaru Sato, a senior technical analyst at Daiwa Securities. "The geopolitical concerns are lowering risk appetites." Sunni insurgents seized a mainly ethnic Turkmen city in northwestern Iraq on Sunday, solidifying their grip on the north after a lightning offensive that threatens to dismember Iraq. Meanwhile, the United States boosted security for its diplomatic staff in Baghdad and said some staff had evacuated the embassy. Crude oil prices rose to new nine-month highs on Friday as concerns persisted that the insurgency in Iraq could disrupt oil exports from the second-largest OPEC producer. Index heavy-weight stocks were weaker, with Fast Retailing Co falling 1.8 percent, and Fanuc Corp shedding 1.3 percent. Exporters were mixed, with Toyota Motor Corp falling 0.2 percent, Sony Corp rising 1.2 percent and Honda Motor Co dropping 0.8 percent. The broader Topix dropped 0.3 percent to 1,240.55, while the JPX-Nikkei Index 400 declined 0.3 percent to 11,286.36. (Editing by Shri Navaratnam)
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