Nikkei falls despite Koizumi's win

Koizumi did well in the weekend poll, but the share market is still weak

TOKYO, Japan -- Tokyo stocks opened firmer on Monday after the LDP's weekend poll victory, but quickly fell into the red after the release of poor industrial production figures.

Japanese industrial output fell 0.7 percent in June from a month earlier on a seasonally adjusted basis.

The benchmark Nikkei 225 share average was up 27 points in early trade, but then slipped mid-morning to be down 121 points or 1 percent at 11,674.22.

The broader TOPIX index was down 5.43 points or 0.5 percent to 1,178.80.

Elsewhere in the region, the Australian market opened higher, but both Korea and New Zealand were weaker.

Taiwan closed by typhoon

Taiwan's market is closed Monday because of a typhoon threatening the island.

In Japan, some high-tech issues made gains after voters gave a mandate to Prime Minister Junichiro Koizumi to forge ahead with proposed painful reforms.

"The election results confirmed that voters approved of Mr Koizumi's reform and the pain it will inflict on their lives, and that's welcome," said Hidenori Karaki, head of equities at Tokyo Mitsubishi Personal Securities.

Among technology issues, Fujitsu Ltd and NEC Corp managed to recover from last week's steep losses.

Despite a worsening in their earnings results for the April-June quarter released late last week, Fujitsu gained 0.63 percent to 1,111 yen and NEC climbed 2.94 percent to 1,574.

Mizuho slumps on bad-loan reports

Mizuho Holdings, the world's biggest bank by assets, was down 25,000 yen or 5.23 percent at 453,000. Its shares were under pressure after Japanese media reported at the weekend the bank expects loan-loss charges to soar by nearly 50 percent in the year to next March.

Analysts said they were paying a close attention to when and how Koizumi and his coalition government will wrap up measures to stimulate the faltering economy.

"The results came in far better than expected," said Hiroyuki Nakai, manager of investment research at Tokai Tokyo Securities.

"So, instead of those who favour out-of-date public spending, Mr Koizumi himself is now able to take the lead in writing down measures to prop up the economy, and when and how these measures will be written down is a focus," he said.

But poor economic data recently and a deterioration in corporate earnings are pushing Koizumi toward urgent steps, analysts said.

Without quick action, the stock market could within weeks breach a 16-year intraday low of 11,433.88 for the Nikkei average that was marked in March, analysts said.

Reuters contributed to this report.