Tokyo Stocks Drop at Break as Earnings Disappoint

Tokyo stocks fell Friday morning after a series of disappointing corporate earnings, but Nissan surged on news it was buying a major stake in Mitsubishi Motors.

The Japanese market got a weak lead from overseas as Wall Street and European bourses put in a lackluster session, while a pick-up in the yen also hit exporters.

A rally in the currency has taken a bite out of Japan Inc's profits, with top automaker Toyota among the firms blaming the stronger yen for shrinking its bottom line.

"It'll be difficult to see a clear direction today," Juichi Wako, a senior strategist at Nomura Holdings, told Bloomberg News.

"We're hitting the peak in earnings releases... and it'll be a reason to hold off on some trades."

The benchmark Nikkei 225 index sank 1.08 percent, or 179.70 points, to 16,466.64 by the break, while the broader Topix index of all first-section shares was down 0.93 percent, or 12.39 points, at 1,324.88.

E-commerce giant Rakuten dived 7.65 percent to 1,128 yen after it reported lower-than-expected profits, while energy explorer Inpex tumbled nearly four percent to 818.6 yen after it forecast weaker sales and profits for the current fiscal year.

Honda and Hitachi are among the firms reporting their latest results later Friday.

Nissan jumped 4.80 percent to 1,035.5 yen, as investors cheered news that it plans to buy a one-third stake in scandal-hit Mitsubishi Motors for $2.2 billion.

Analysts said the new tie-up gives Nissan access to Mitsubishi's strong foothold in Southeast Asia and some key technology, including hybrids and minicars, which are hugely popular in Japan.

However, Mitsubishi dropped nearly five percent to 548 yen -- after a 16 percent surge a day earlier on news of the Nissan deal -- as transport ministry officials raided its headquarters.

Officials said the company has not properly explained details of a fuel-economy testing scandal that plunged it into crisis.

Apple suppliers Japan Display and Alps Electric both fell after the tech giant's shares tumbled in U.S. trade.

On currency markets, the dollar edged lower to 108.81 yen from 109.00 yen on Thursday in New York.