Nikkei slips 1.8 percent on exporters

By Elaine Lies

TOKYO (Reuters) - Japan's Nikkei stock average shed 1.8 percent on Monday, its biggest one-day percentage loss in nearly two weeks, as Honda Motor Co and other exporters fell on worries about the economy and a slightly stronger yen.

Kyocera Corp and tech shares fell on concerns that the economic chill will prompt manufacturers around the world to cut back on technology spending, while losses in other Asian stock markets helped drag the overall market lower.

But some shares managed to defy the trend, with Nintendo forging upwards for its second positive session after boosting its annual profit outlook by 23 percent, while Citizen Holdings Co Ltd surged after saying it would buy back up to 9.5 percent of its outstanding shares.

"Things in the tech market are likely to get pretty tough and this will have to be taken into account in terms of plans for the future, but it's still too early to say anything for sure," said Tomomi Yamashita, a fund manager at Shinkin Asset Management.

"At the very least, tech shares are being sold right now based on the U.S. and the global economy."

U.S. shares tumbled on Friday after computer maker Dell sparked fears of weakness in the tech sector when it warned of lower tech spending worldwide, sending the Philadelphia Semiconductor Index down 2.8 percent.

The benchmark Nikkei shed 238.69 points, completely erasing last week's gains, to finish at 12,834.18. The broader Topix lost 1.9 percent to 1,230.64.

Losses picked up speed in the afternoon as Asian shares fell more sharply, with the MSCI index of Asian stocks outside Japan down 2.4 percent by 2:07 a.m. EDT.

Market players said bargain-hunting had emerged at the lows to stem the slide, but with a lack of buying incentives or substantial investor presence, rises were impossible.

"While it's true that the Nikkei is tracking Wall Street and exporters are down, we're also seeing a fairly natural correction after the rises we had last week," said Yutaka Miura, senior technical analyst at Shinko Securities.

EXPORTERS, HIGH TECH HIT

Exporters slipped as the dollar fell against the yen, fetching around 108.53 yen

Honda lost 3.4 percent to 3,460 yen, becoming the biggest drag on the Nikkei 225 by volume weight. Toyota Motor Co lost 2.2 percent to 4,820 yen.

"Basically autos are a sector that people probably want to lighten up on, given the economic outlook," said Shinkin's Yamashita.

Toyota last week cut its 2009 vehicle sales forecast by nearly 7 percent, hit by high fuel demand, a move that highlighted an increasingly difficult environment.

Tech stocks shared in the woes, with Kyocera losing 2.6 percent to 8,990 yen and Tokyo Electron Ltd shedding 3.4 percent to 6,030 yen.

Banks were down as well, weighing on the Topix in particular, though losses were limited by a lack of Japan-specific factors, market players said.

"Basically, worries are starting to emerge about U.S. bank results, which are set to start being released in a couple of weeks, and this makes it hard for investors to reach out their hand for bank shares," said Noritsugu Hirakawa, a strategist at Okasan Securities.

Mitsubishi UFJ Financial Group was down 1.8 percent at 824 yen, Mizuho Financial Group lost 1.9 percent to 461,000 yen and Sumitomo Mitsui Financial Group was down 2.4 percent at 654,000 yen.

But not all the news was grim.

Nintendo jumped 3.7 percent to 53,700 yen, and has risen some 12 percent since lifting its profit outlook on Friday on robust demand for its Wii game console.

Citizen Holdings jumped 8.7 percent to 825 yen after the watchmaker said it would spend up to 20 billion yen to buy back up to 9.5 percent of its shares from the market by March 31 to improve its per-share returns.

Citizen also raised its group net profit forecast for the year to March by 14 percent to 14.8 billion yen to account for special gains on the sale of shares in Star Micronics Co Ltd

Trade was thin, with 1.3 billion shares changing hands compared with last week's daily average of 1.4 billion. Declining shares outpaced advancing ones by nearly 8 to 1.

(Reporting by Elaine Lies; Editing by Chris Gallagher)