Nikkei plunges 9.4 pct, biggest 1-day fall since '87

By Aiko Hayashi

TOKYO (Reuters) - The Nikkei average plunged 9.4 percent on Wednesday, its biggest one-day drop since the 1987 stock market crash, as fear spread of a global recession, fueled by expectations of a slide in profits at Toyota Motor Corp and a firmer yen.

Panic over the fast-spreading financial crisis dragged down markets across Asia, with Japanese steelmakers such as Nippon Steel Corp sliding, as the Nikkei set another five-year closing low.

"The deteriorating outlook for the economy and the deepening financial crisis are pushing fear to its limit," said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.

"Investors want to dump shares as their willingness to take risks has shrunk, but no one wants to buy even if stocks are valued cheaply."

The yen climbed to a six-month high against the tumbling U.S. dollar, as investors stampeded away from stocks and risky positions.

The Nikkei posted its biggest one-day fall since a 14.9 percent drop on October 20, 1987, the day after Black Monday.

The Indonesia Stock Exchange halted trading on Wednesday after the benchmark composite index .JKSE dropped more than 10 percent, while Hong Kong's main stock market index .HSI dropped more than 5 percent.

The benchmark Nikkei .N225 slid 952.58 points to 9,203.32, its lowest close since 2003. The broader Topix lost 8.0 percent to 899.01.

Toyota tumbled 11.6 percent to 3,280 yen after the Nikkei business daily said it was likely to post a 40 percent slide in annual profit, thanks to weak sales in North America and slower growth in China.

A company source told Reuters that Toyota was considering cutting its annual earnings forecasts due to sluggish demand.

Analysts said that even at lower valuations, investors would still shun the market as more companies were expected to cut their earnings forecasts.

(Reporting by Aiko Hayashi; Additional reporting by Masayuki Kitano and Kiyoshi Takenaka; Editing by Rodney Joyce)