Japan stocks drop

Japanese stocks slipped on Tuesday, with exporters such as Honda Motor Co Ltd coming under pressure after downgrades of US credit card firms fuelled recession fears. Investors dumped shares of companies issuing disappointing earnings results. Olympus Corp tumbled nearly 14 percent to its daily limit after cutting its outlook due to a stronger yen and falling camera prices.
But Mitsubishi Corp and other trading houses provided some support in the market after Goldman Sachs lifted 2008/09 coal and iron ore prices forecasts, saying demand for steelmaking raw materials has been growing with the worldwide rise in steel production.
"Ordinary investors can't wipe out the image that if the US economy slows, Japanese exporters will be hit," said Fujio Ando, a senior managing director at Chibagin Asset Management. But he added that demand in Europe and Asia will likely make up for such a fall. "Rather, I'm more concerned about next week. What if there won't be any interest rate cuts by the Bank of Japan and the G7 meeting ends up as just a gathering?"
The benchmark Nikkei average was down 0.8 percent or 114.20 points to end at 13,745.50, after a 2.7 percent gain on Monday. The broader TOPIX index was down 0.7 percent or 9.24 points at 1,355.48. The spectre of a US recession on top of a festering crisis in financial markets will test the limits of cooperation among the Group of Seven industrial powers when G7 finance ministers and central bank chiefs meet on Saturday in Tokym.
Downgrades to US financial institutions such as American Express, combined with a report showing slower-than-expected factory orders, hurt other economically sensitive sectors such as home builders and retailers. On Monday, the Dow Jones industrial average fell 0.85 percent to 12,635.16. Japanese exporters fell as Honda shed 3.5 percent to 3,310 yen and Toyota Motor Corp gave up 2 percent to 5,780 yen before reporting results after the closing bell.
Toyota, the world's most profitable car maker, then reported a 7.5 percent rise in quarterly net profit as speedy growth in China, Russia and other emerging markets made up for a slowdown in the United States, and it kept its annual forecasts unchanged.
Canon Inc was down 2 percent at 4,530 yen. Bank shares also declined. Top bank Mitsubishi UFJ Financial Group eased 1.2 percent to 1,022 yen and No 2 Mizuho Financial Group fell 2 percent to 485,000 yen. Olympus lost 13.9 percent to 3,100 yen, becoming the top drag on the Nikkei 225, after the digital camera maker on Monday revised down its profit outlook for the year by 4 percent.
Investors sold off others with disappointing results. Shares of Yamaha Motor Co Ltd fell 15.2 percent, or its daily limit of 400 yen, to 2,225 yen after the motorcycle maker said it expected a 17 percent drop in group net profit in the current business year. Among trading houses, Mitsubishi Corp added 1.9 percent to 3,020 yen, Itochu Corp jumped 6.2 percent to 1,036 yen and Marubeni Corp gained 1.9 percent to 763 yen.
Shares in Yahoo Japan Corp jumped again following Microsoft Corp's $44.6 billion bid for Yahoo Inc. Yahoo Japan, which is owned 41 percent by Softbank Corp and 33 percent by Yahoo Inc, was up 5 percent at 48,300 yen. Trade was light on the Tokyo exchange's first section, with 2 billion shares changing hands, compared with last week's daily average of 2.2 billion.