* Nikkei drops 6.4 pct to lowest close since Nov. 20
* Yen strength hits exporters, high techs battered
* Global economy fears drag down trading firms, steelmakers (Adds comment, details)
By Aiko Hayashi
TOKYO, Dec 2 (Reuters) - The Nikkei average sank 6.4 percent on Tuesday, hitting a nearly two-week closing low, as exporters such as Honda Motor Co (7267.T: Quote, Profile, Research, Stock Buzz) tumbled on the yen's strength against the dollar as fears deepened about the global economy in the wake of dismal data worldwide.
Mitsubishi Corp (8058.T: Quote, Profile, Research, Stock Buzz) and other trading houses took a beating after oil prices slid to a 3-½ year low under $48 amid the grim global economic outlook and after producer group OPEC decided to leave output unchanged. [O/R]
Reflecting the gloom at home, data showed confidence among Japanese manufacturers fell at its sharpest pace on record in November. [ID:nT66755]
"Investors knew the economy was bad, but a series of economic indicators showed it had deteriorated far more than expected. That is responsible for most of the fall in Japanese stocks today," said Soichiro Monji, a chief strategist at Daiwa SB Investments.
"It's become clear that it's not just the United States but everyone."
Economic data showed factories were slashing output in the United States, Europe and China last month as demand dropped, while U.S. Federal Reserve Chairman Ben Bernanke cautioned that the economy would probably remain weak for a while. [ID:nL1271811]
In Japan, the central bank said on Tuesday it would accept a wider range of corporate debt as eligible collateral to ease Japanese companies' quickly shrinking access to funding as the end of the year approaches. [ID:nT160636]
The benchmark Nikkei .N225 shed 533.53 points to 7,863.69, its lowest close since Nov. 20.
The fall came after the benchmark booked a 7.6 percent gain last week for its best weekly performance in a month, and ended November as its best month since May.
The broader Topix .TOPX declined 4.9 percent to 787.12.
Analysts said the market's losses accelerated on growing concerns about the fate of U.S. automakers.
U.S. carmakers led by General Motors Corp (GM.N: Quote, Profile, Research, Stock Buzz) on Monday rushed to finish restructuring plans demanded by Congress before lawmakers reopen the debate this week on the $25 billion in emergency funding the industry says it needs to survive. [ID:nN01523036]
"Investors increasingly wanted to stand on the sidelines because we still don't know what will happen to the Big Three," said Tsuyoshi Segawa, an equity strategist at Shinko Securities.
Caution also grew after the Wall Street Journal reported that Goldman Sachs, known for having avoided much of the damage that has battered its Wall Street rivals, is likely to report a net loss of as much as $2 billion for its latest quarter.
GLOOMY GLOBAL ECONOMY HITS EXPORTERS, TRADING FIRMS
The dollar was trading around 93.38 yen
Investors fret over a stronger yen as it curbs exporters' overseas profits when they are repatriated.
Honda slid 6.9 percent to 1,886 yen and Toyota Motor Corp (7203.T: Quote, Profile, Research, Stock Buzz) fell 4.1 percent to 2,825 yen.
Kyocera Corp (6971.T: Quote, Profile, Research, Stock Buzz) and other high-tech shares also fell after the Institute for Supply Management said U.S. factory activity fell in November to its weakest since 1982. [ID:nL1566758]
Shares of Kyocera dropped 7 percent to 5,450 yen, while Canon Inc (7751.T: Quote, Profile, Research, Stock Buzz) lost 6.2 percent to 2,640 yen.
Oil extended losses Clc1, with crude for January delivery falling $1.43 to $47.85 a barrel by 0342 GMT, the lowest since May 2005.
Mitsubishi, Japan's largest trading house, plunged 10.1 percent to 1,073 yen and fellow trader Itochu Corp (8001.T: Quote, Profile, Research, Stock Buzz) tumbled 12.2 percent to 417 yen. Trading firms are major dealers in energy and have stakes in oil and gas projects.
Itochu also announced on Monday it had suspended development of the Entrada oil and gas field in the Gulf of Mexico as it found that the reserves there were short of its estimates.
Oil and gas field developer Inpex Corp (1605.T: Quote, Profile, Research, Stock Buzz) declined 10.1 percent to 526,000 yen.
Other stocks that depend on global demand such as steelmakers came under pressure, with Nippon Steel Corp (5401.T: Quote, Profile, Research, Stock Buzz) sliding 6.6 percent to 270 yen.
Utilities were rare gainers as investors sought the safety of defensive stocks that are seen as less vulnerable to the global economic downturn.
Tokyo Gas Co (9531.T: Quote, Profile, Research, Stock Buzz) jumped 4.1 percent to 455 yen, becoming the top positive contributor to the Nikkei 225.
Trade picked up slightly on the Tokyo exchange's first section, with 1.89 billion shares changing hands, compared with last week's daily average of 1.84 billion.
Declining stocks outpaced advancing ones by nearly 10 to 1. (Reporting by Aiko Hayashi; Editing by Chris Gallagher)
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