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Nikkei hovers around 4-wk closing low, tech shares drop on HP profit warning

Wednesday, 3 Oct 2012 | 10:06 PM ET

* Canon, Ricoh, Konica slip after HP profit warning

* Nikon falls on report operating profit below consensus

* Investors wary ahead of ECB, BOJ meetings

By Sophie Knight

TOKYO, Oct 4 (Reuters) - Japan's Nikkei share average stayed near a four-week closing low in choppy trade on Thursday, with technology shares slumping on concerns over dwindling profits, although robust U.S. economic data offered some support.

Recently battered exporters were granted some breathing space by a slightly softer yen, with Nissan Motor Co

gaining 2.3 percent, but tech-related shares such as Canon Inc

slipped after a profit warning from U.S. counterpart Hewlett-Packard

. Nikon Corp

sagged 3.6 percent after the Nikkei business daily said its interim operating profit would drop 43 percent on the year to 35 billion yen ($445 million), signalling a slowdown in sales.

The Nikkei

added 2.4 points to 8,749.25, hovering around a four-week closing low struck on Wednesday, with investors cautious ahead of a European Central Bank meeting on Thursday, and a Bank of Japan policy decision and U.S. jobs data on Friday.

"Investors are backing out of tech shares, where profits are looking weaker and weaker," said Yasuo Sakuma, portfolio manager at Bayview Asset Management.

"After companies went ex-dividend at the end of September there are precious few reasons to buy."

Canon dropped 3.3 percent, while Ricoh Co Ltd

, Konica Minolta Holdings Inc and TDK Corp

sagged between 1.5 and 3.9 percent after HP warned of a darker outlook for 2013 earnings.

Bearishness on tech-related shares contributed to Nidec Corp's

3.1 percent loss, with the micro motor maker dealt a double blow after it was downgraded by J.P. Morgan to 'neutral' from 'overweight'.

Toymaker Tomy Co Ltd

ran against the market, however, shooting up 11.3 percent after the Nikkei reported it had acquired the right to market Pokemon merchandise worldwide, taking over from a unit of Namco Bandai Holdings Inc

, which lost 2.5 percent.

Hoisted by gains for smaller firms, the broader Topix

added 0.3 percent to 729.44.

Yet trading remained restrained in a week so far characterised by very low volumes, ahead of the closely watched U.S. non-farm payrolls report on Friday, when the Bank of Japan's policy meeting also concludes.

MIXED CONSENSUS

Market consensus is mixed over whether the BOJ will ease monetary policy further, as it may be reluctant to expand its balance sheet after swelling it by 10 trillion yen ($127 billion) last month, although its latest survey showed increasing pessimism about the domestic economy.

However, in the latest sign that the U.S. economy is getting back on its feet, data showed growth in the country's service sector in September, contrary to economists' expectations of a slight decrease, while the private sector added more jobs than anticipated last month.

"After falling for four days and a totally directionless day yesterday, the market is due for a rebound and the U.S. data will be the catalyst," said Toshiyuki Kanayama, senior market analyst at Monex.

The Nikkei ended down for a fourth straight session on Wednesday, losing 0.5 percent to 8,746.87 to a four-week closing low.

"The troughs over the last five months have been gradually getting higher so it's very important it doesn't hit its September 3 low of 8,646," said Kanayama.

The benchmark stooped to 8,238.96 on June 4, and then fell to 8,328.02 on July 25 after another brief rally. Another rebound and pullback left it at 8,646.03 on Sept. 6.

The index is expected to close up 12 percent on the year at about 9,500, according to 22 analysts and fund managers polled by Reuters. The index is currently up 3.4 percent for the year.

($1 = 78.5300 Japanese yen)

(Additional reporting by Dominic Lau; Editing by Joseph Radford)

((sophie.knight@thomsonreuters.com)(+81 3 6441 1833)(Reuters Messaging:)(sophie.knight.thomsonreuters.com@reuters.net))

Keywords: MARKETS JAPAN STOCKS/