May 6, 2016 / 3:22 AM / 2 years ago

Nikkei stumbles as strong yen, disappointing earnings take toll

TOKYO, May 6 (Reuters) - Japanese stocks fell on resumption of trading on Friday morning after a three-day holiday closure as an air of caution prevailed ahead of a key U.S. jobs report, while investors also worried about the impact of a strong yen on corporate profits.

The Nikkei share average fell 0.7 percent to 16,031.72 in morning trade. The Tokyo Stock Exchange was closed the previous three days for national holidays collectively known as Golden Week in Japan.

During the market closure, the yen climbed to a fresh 18-month high against the U.S. dollar, hurting the outlook for exporters and other businesses that are exposed to the vagaries of the currency markets.

Market players said Japanese investors are now focused on U.S. non-farm payrolls data due to be released later in the day.

“The yen has clearly shocked a lot of people with its aggressive strength this past week, but whether or not the negative sentiment is overdone won’t be clear until we see the U.S. non-farm payrolls figures,” said Stefan Worrall, director of Japan equity sales at Credit Suisse.

The market players said a weak U.S. payrolls report could lead to further yen strength, heaping more pressure on exporters’ profit margins.

On Friday, disappointing corporate earnings weighed on Japanese indexes as Sharp Corp fell 7.1 percent on a Nikkei business daily report that it likely posted a net loss of around 300 billion yen ($2.80 billion) for the year through March 2016.

Itochu Corp also fell on a Nikkei report that the trading company had missed its forecast for the fiscal year, sliding 3.1 percent. Olympus Corp ended the morning session 3.7 percent lower after the precision instruments maker announced a disappointing profit outlook for the fiscal year through March 2017.

Takata Corp plunged 12.9 percent after the company and the U.S. Transportation Department confirmed automakers will recall an additional 35-40 million Takata air bag inflators in the U.S.

Suntory Beverage & Food Ltd bucked the morning’s weakness to climb 5.8 percent after reporting quarterly gains of more than 20 percent in its operating and net profit.

The broader Topix fell 0.6 percent to 1,291.67 and the JPX-Nikkei Index 400 declined 0.6 percent to 11,675.91. ($1 = 107.0800 yen) (Reporting by Joshua Hunt; Editing by Shri Navaratnam)

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