TOKYO, May 12 (Reuters) - Japan's Nikkei share average slipped from a two-month high on Tuesday as concerns about further waves of coronavirus infections undermined recent optimism on economic re-openings.
Toyota Motor, the biggest Japanese company by market cap, fell 2.0% after the automaker warned its operating profit will fall almost 80% in the current financial year.
The Nikkei share average ended down 0.12% at 20,366.48 points, a day after it hit a two-month high. It has risen 18.7% from a trough hit on March 19.
Investors' confidence has improved as more governments relax anti-virus measures and try to get economies back on their feet, but news of a rise infections in countries that had appeared to be containing the disease, such as China, South Korea and Germany, dented optimism.
Some market players noted the rally in the market has been based on expectations that the economy would quickly recover after a dismal April-June quarter, though many economists warn it could take much longer.
"When you think of earnings outlook and dire economic conditions, it is hard to expect the market to rise further from here," said Takuya Hozumi, global investment strategist at Mitsubishi UFJ Morgan Stanley Securities.
Highlighting the magnitude of the damage from the pandemic, the president of Toyota Motor told reporters its impact would be bigger than the 2008 global financial crisis. Other cyclical shares were badly hit. Isetan Mitsukoshi Holdings fell 8.7% after the department store operator posted a loss for the financial ended March.
Bridgestone slipped 4.0% after the tyre maker posted a 65% fall in net profit for January-March, compared with a year earlier, and withdrew its annual forecast.
Kawasaki Heavy Industries sank 5.7% as the firm halved its annual dividend to save cash.
Even sharper dividend cuts came from one real estate investment trust (REIT),
Invincible Investment fell 22.7%, its daily limit, after the hotel REIT slashed its dividend by 98%.
The TSE's REIT index dropped 2.2% from two-month high touched a day earlier on worries other funds may follow suit.
On the other hand, semi-conductor related shares were among the best performers on expectations of increased internet traffic after the coronavirus.
Sumco Corp rose 3.3% and Advantest Corp gained 2.3%.
Semiconductor manufacturing equipment maker Tokyo Seimitsu rose 3.2% on strong earnings.
Square Enix Holdings Co Ltd rose 4.8% after the online entertainment company raised its profit estimate for the financial year ended March and hiked its dividend.
"I think the market is still retaining an uptrend," said Yuya Fukue, trader at Rheos Capital Works.
"At the same time, I expect the polarisation of the market to continue. The tech sector will flourish as it is becoming an important infrastructure for the society."
The broader Topix fell 0.26% to 1,476.72. (Reporting by Hideyuki Sano; Editing by Anil D'Silva and Kim Coghill)