Tokyo stocks finish lower

Japanese stocks slid on Thursday to an 18-month closing low, dragged down by automakers and property shares sold on worries about the US economy and lingering fears about the impact of the global credit crunch. Long-term concerns about Japan's economy were fanned by a Goldman Sachs report saying the world's second-largest economy was in danger of following the United States into recession later this year.
The report was later reinforced by the release of the index of leading economic indicators, which showed a fall to a preliminary 10.0 in November from 18.2 in October. A reading below 50 suggests a contraction.
"The mood domestically isn't very good and since exporters drive the economy, a poor showing by the US economy will of course have an impact," said Takahiko Murai, general manager of equities at Nozomi Securities. "The Japanese government talks about 2 percent growth but this will clearly be hard. I myself believe we may be heading for no growth at all."
A slightly stronger yen contributed to the woes of exporters like Canon Inc, depressing the market still further, though bargain hunting in high-tech and buying of drugmakers and other defensive shares kept the Nikkei from particularly sharp falls.
Goldman Sachs's Japan economists said in a note to clients that the probability of a recession in the world's second-largest economy was 50 percent, forecasting slow growth in the first half of the year as emerging market economies cool.
Goldman also cut its forecast for growth in the Japanese economy this year to 1 percent from 1.2 percent after it said the US economy will shrink in the second and third quarters.
"I think indicators show that Japan's economy may have peaked out last summer and could be starting to retreat," said Nozomi's Murai. The benchmark Nikkei closed down 1.45 percent at 14,388.11, its lowest close since June 2006, after shedding 211.05 points. The broader TOPIX index was down 1.6 percent at 1,401.36.
Shares of Mitsubishi Estate Co and other property companies fell after Credit Suisse issued a note to clients in which it forecast that the credit crunch would lead to a slowdown in global funds flowing into the Japanese real estate market.
Mitsubishi Estate fell 5.7 percent to 2,330 yen and Sumitomo Realty & Development Co slipped 5.3 percent to 2,480 yen, helping drive the real estate subindex down 4.4 percent to make it the second-worst-performing sector on the day.
Shares of automakers such as Toyota Motor Corp fell due to continuing worries about US economic health. Toyota was down 2.6 percent at 5,660 yen, while Honda Motor Co Ltd lost 2.3 percent to 3,400 yen and Nissan Motor Co Ltd shed 3.1 percent to 1,096 yen.
Tokyo Electron rose 2.6 percent to 6,230 yen, and chip tester maker Advantest Corp gained 1.8 percent to 2,845 yen. Trade was moderately active, with 1.91 billion shares changing hands on the first section of the Tokyo Stock Exchange, compared with an average 1.39 billion for the final week of December. Declining shares beat advancers by nearly four to one.