Japan's Nikkei stock average slid 2 percent on Wednesday to hit a seven-week closing low as deepening woes in the global financial system hurt bank shares, while Toyota Motor and other exporters sank on a strong yen. Financial worries continued to dent investor confidence in Japan after State Street Corp spooked Wall Street on Tuesday by saying it might need to raise capital and reported a 71 percent drop in fourth-quarter profit.
The grim news came a day after Royal Bank of Scotland Group Plc posted the biggest loss in British corporate history. Bank of Yokohama tumbled more than 7 percent after the head of Japan's largest regional bank said it has no immediate plans to apply for public funds but will leave open the option of tapping state money if the need arises.
"We undoubtedly experienced a small surprise as those names such as State Street were new," said Junichi Misawa, a senior fund manager at STB Asset Management. "But specific measures by governments and central banks to salvage the financial system had mitigated extreme fears and that framework won't change." The benchmark Nikkei shed 164.15 points to 7,901.64, the lowest close since December 2.
The broader Topix lost 2.2 percent to 787.15. Among big movers, shares of Elpida Memory gained 2.3 percent to 545 yen after the company said it was in talks with Taiwanese DRAM makers including Powerchip, ProMOS Technologies and Rexchip, on a possible merger as well as other options. Japan's top bank Mitsubishi UFJ Financial Group lost 3.8 percent to 483 yen and second-ranked Mizuho Financial Group dropped 4.8 percent to 217 yen. No 3 Sumitomo Mitsui Financial Group shed 5.4 percent to 3,340 yen. The banking subindex gave up 3.5 percent.
Shares of Bank of Yokohama tumbled 7.4 percent to 440 yen. Automakers fell amid slumping demand as consumers cut back spending in the face of recession. Toyota, which on Tuesday said that the founder's grandson, Akio Toyoda, would head the firm, was down 3.9 percent at 2,980 yen. Nissan Motor Co sank 5.5 percent to 309 yen and Honda Motor Co fell 2.1 percent to 2,085 yen.
Isuzu Motors Ltd skidded 6.8 percent to 110 yen after Credit Suisse downgraded the automaker's rating to "underperform" from "neutral" and cut its target price to 100 yen from 170 yen. Sony Corp shed 1.8 percent to 1,989 yen after the Financial Times reported that the company would announce details this week of a restructuring plan outlined last month.
The plan called for curbing investment, closing plants and cutting 16,000 jobs to save $1.1 billion a year in costs. Other tech shares extended recent losses, with Kyocera Corp down 2.8 percent at 5,930 yen and TDK Corp declining 3.3 percent to 3,270 yen. Trade was moderate on the Tokyo exchange's first section, with 2 billion shares changing hands, almost in line with last week's daily average of 1.9 billion. Declining stocks outpaced advancing ones by more than 3 to 1.