August 10, 2016 / 3:02 AM / 2 years ago

Nikkei slips as stronger yen takes toll

* Upbeat capex data, hopes for BOJ ETF buying limit losses

TOKYO, Aug 10 (Reuters) - Japan’s Nikkei share average slipped on Wednesday, as the yen strengthened against the dollar after downbeat U.S. data and investors locked in gains ahead of a Japanese holiday.

The Nikkei ended the morning session down 0.3 percent at 16,716.58.

The dollar lost ground against the yen after a weak U.S. productivity report on Tuesday suggested the economy may not be growing as quickly as many had believed, prompting investors to cut long-term inflation expectations and bets that the U.S. Federal Reserve will hike interest rates later this year.

“It’s all about interest rate differentials, and expectations,” said Gavin Parry, managing director at Parry International Trading Ltd in Hong Kong.

The broader Topix finished morning trade down 0.4 percent at 1,312.11, while the JPX-Nikkei Index 400 shed 0.5 percent to 11,805.19.

A robust U.S. jobs report on Friday had weakened the yen, and helped the Nikkei rise to two-week intraday highs on Tuesday.

Markets in Japan will be closed on Thursday for a public holiday, with some investors planning to take Friday off as well for a long weekend.

Japanese economic data released before the market opened contained some hopeful signs. Core machinery orders rose 8.3 percent, well ahead of the median estimate for a 3.1 percent increase, Cabinet Office data showed, suggesting companies are gradually becoming more willing to increase capital expenditure.

Also underpinning sentiment was hope that the Bank of Japan would buy exchange-traded funds under its expanded purchase programme. The central bank said late last month that it would increase ETF purchases so its total holdings increase at an annual pace of 6 trillion yen, up from its previous pace of 3.3 trillion yen.

Shares of Bridgestone Corp fell 6.2 percent after the tire and rubber manufacturer shaved its annual group net profit forecast by 16.8 percent, and its group operating forecast by 12.9 percent.

Japan Display Inc dropped 5.2 percent after it reported a wider net loss for April-June and said its biggest investor has pledged full financial support to the Apple Inc supplier as it seeks to replenish capital used up as smartphone sales slow.

Shiseido Co Ltd shares shed 7.6 percent after the cosmetics company cut its annual profit outlook.

But shares of Tomy Co Ltd surged 6.9 percent after the toy company narrowed its group operating loss and forecast annual profit to rise 48.2 percent. (Reporting by Tokyo markets team; Editing by Jacqueline Wong)

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