TOKYO: Japan's Nikkei edged down 0.4 per cent on Tuesday, hit by profit-taking a day after marking its biggest one-day rise in two months, though support at its 25-day moving average around 11,100 was expected to hold. IHI Corp surged 6.4 per cent after it beat expectations by lifting its net profit estimate for the past financial year to 17 billion yen ($181 million) from 7 billion yen. Market players said that the Nikkei was vulnerable to profit-taking after rising 2.3 per cent on Monday and that investors were reluctant to buy actively ahead of key events this week, including the Federal Reserve's two-day policy meeting. "Nobody expects the Fed to raise rates at this meeting, but a lot of attention will be paid to their statement for hints about when a rate hike could be expected, and if that leads to a stronger yen the Nikkei could be sold further," said Noritsugu Hirakawa, a strategist at Okasan Securities. "But earnings so far are pretty good and this should support the market even if it does dip." The benchmark Nikkei fell 46.97 points to 11,118.82 yen by the midday break, while the Topix shed 0.5 per cent to 991.87 yen. Falls much below 11,100 are unlikely, but should this happen, support is seen holding at 10,800, roughly a 38.2 per cent retracement of a two-month rally that started in early February and pushed the Nikkei up to an 18-month peak of 11,408.17 in early April. One trigger for profit-taking could be a stronger yen, analysts said. Investors fret about a stronger yen because it eats into exporter profits when repatriated. The dollar was down 0.2 per cent against the yen at 93.78 yen and the euro lost 0.3 per cent to 125.47 yen. The euro fell sharply on Monday after uncertainty about the timing of a bailout for Greece triggered a broad selloff, but market players in Tokyo said this was likely to be the limit of the Greece fallout on shares for now. "Certainly there's worries about Spain and Portugal, but most of the major economies in Asia are in much better shape and the world economy is growing, so anything like what happened in 2007 seems unlikely for now, at least in Asia," said Kenichi Hirano, operating officer at Tachibana Securities. EARNINGS INCENTIVE Banks took a hit after their US peers fell. Japan's No. 3 bank, Sumitomo Mitsui Financial Group, fell 1.5 per cent to 3,235 yen and top bank Mitsubishi UFJ Financial Group lost 0.6 per cent to 507 yen. With Japan's earnings season moving into higher gear this week, attention centred on shares that have recently reported earnings or revised forecasts. IHI soared 6.4 per cent to 183 yen, bringing its total gains over the two days since news emerged about a joint venture with Toshiba Corp to 13.7 per cent. "Having a company like this show such solid profits is quite encouraging to others in the market," said Masayoshi Okamoto, head of dealing at Jujiya Securities. Japan's earnings season moves into higher gear this week, with Sharp Corp, the world's No. 4 LCD TV maker, due to announce after the bell on Tuesday. Other companies announcing results include chip-gear maker Advantest Corp and copier maker Ricoh Co Ltd.

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