Nikkei sags 1.7 percent

Japan's Nikkei average slid 1.7 percent to a one-week closing low on Wednesday, dragged down by financial shares on lingering credit worries, while a stronger yen pressured exporters such as Toyota Motor Co.
Yoshinori Nagano, chief strategist at Daiwa Asset Management, said financial stocks appear to be in an adjustment phase after their recent gains on the overly optimistic view that the credit crisis may soon be over.
The benchmark Nikkei shed 233.79 points to end at 13,926.30, the lowest close since May 12. The broader Topix index fell 2.1 percent or 29.75 points to 1,370.09. Mitsubishi UFJ Financial Group, Japan's biggest bank, tumbled 4.5 percent to 1,008 yen, while No 2 Mizuho Financial Group skidded 5 percent to 514,000 yen and Sumitomo Mitsui Financial Group, the third-biggest bank, dropped 4.4 percent to 821,000 yen.
Japan's top three banks lost a total of 861 billion yen ($8.3 billion) on investments related to subprime US mortgages in the year to March 2008, with the bulk of that coming from No 2 lender Mizuho. Meredith Whitney, banking analyst at Oppenheimer & Co, said the credit crisis would result in three years of multibillion dollar revenue declines for banks, leading an index of S&P financials to close at its lowest level in a month on Tuesday.
The dollar fell 0.4 percent against the yen to 103.25 yen Investors have been concerned about a stronger yen as it curbs exporters' overseas profits when they are brought back home. Katsuhiko Kodama, senior strategist at Toyo Securities, said that investors in the Japanese market are not yet concerned about the impact of inflation in the United States, but the market lost steam as Japanese stocks are no longer valued cheaply. "The overall market is unlikely to move drastically upward or downward from now on as investors shuffle stocks in their portfolios after the earnings season," Kodama said.
Worries about the US economy have grown on record oil prices and after the US Producer Price Index, excluding volatile food and energy costs, rose at the fastest since 1991 for the year to April, sending US stocks lower.
Daiwa Asset's Nagano said Japanese investors were not too concerned about US inflation. Exporters fell, with Toyota down 3.3 percent at 5,240 yen and Canon Inc sliding 3.5 percent to 5,460 yen. Millea Holdings rose 1.4 percent to 4,360 yen after Japan's largest non-life insurer forecast during afternoon trade that it would book 150 billion yen ($1.45 billion) in net profit this year to March 2009, beating market expectations.
Some energy-related shares such as oil distributor Showa Shell Sekiyu KK gained after oil hit a new peak near $130 a barrel on Tuesday. Showa Shell added 1.8 percent to 1,173 yen and oil and gas field developer Inpex Holdings Inc was flat at 1.39 million yen.
Another bright spot was Kubota Corp. The stock jumped 4.7 percent to 822 yen after brokerages lifted their target prices for the farm equipment maker, citing growth in Asia and prospects of an earnings slump bottoming out soon.
Japan Communications Inc was bid up by its daily limit of 10 percent to 108,000 yen after its CEO told Reuters on Tuesday that its annual sales may exceed its forecast, causing a glut of buy orders.
The company had forecast a 70 percent rise in sales but said it may exceed that target and even double sales, as an agreement with NTT DoCoMo Inc gives the Japanese wireless data provider access to the fast-growing high-speed Internet market. Trade was active on the Tokyo exchange's first section, with 2.4 billion shares changing hands, compared with last week's daily average of 2.1 billion.Declining stocks outpaced advancers by 5 to 1.