TOKYO -- Growing fears about whether the U.S. economy is in recession drove Japan's benchmark Nikkei to its lowest close in 2-½ years on Monday as exporters tumbled, with Sony Corp finishing at its lowest in over two years.
Toyota Motor Corp slipped after company president Katsuaki Watanabe said on Friday that North American demand for this year looks weaker than the company estimated late last year, with fellow carmaker Nissan Motor Corp also sliding.
Bleak U.S. jobs data even overpowered surprisingly positive Japanese machinery orders figures, leading both the Nikkei and TOPIX down more than 2 percent in afternoon trade as investors dumped shares.
Sony tumbled 5 percent to 4,380 yen, its lowest close since December 19, 2005 as the yen advanced against the dollar. By late Tokyo, the dollar was hovering just above 102 yen. "The machinery orders were a surprise, but the real problem right now is the U.S., with the final toll of the subprime crisis still unknown," said Katsuhiko Kodama, senior strategist at Toyo Securities Co. "Today, sales just invited more sales."
The benchmark Nikkei .N225 finished down 250.67 points or 2 percent at 12,532.13, its lowest since September 1, 2005. The broader TOPIX closed down 1.9 percent at 1,224.39.
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Long-term investors have pulled back to wait for clearer indications of the state of the U.S. economy, which left Monday confined mainly to day traders.
"Everyone's watching to see if the U.S. economy really is in a recession or not, and this situation will continue for a while, inhibiting bargain-hunting," said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.
"Though 12,500 is quite low in terms of valuation, everything depends on the U.S., so nobody's buying now. We really can't predict what will happen over the short term."
U.S. recession worries were fanned after the Labor Department said on Friday that 63,000 nonfarm jobs had been eliminated in February, in contrast to Wall Street economists' forecasts that 25,000 jobs would be added.
Japanese machinery orders posted their biggest rise in seven years, but the market shrugged this off as economists warned that the 19.6 percent jump may be a one-off, with orders likely to retreat in February.
FIRM YEN HITS EXPORTERS Sony tumbled as the strong yen hit exporters, many of which have assumed a currency rate of 105 yen to the dollar in making their profit forecasts.
A stronger yen makes Japanese goods less competitive in overseas markets and cuts into profits made abroad when brought back to Japan. Toyota also suffered, slipping 2.4 percent to 5,200 yen. Its president, Katsuaki Watanabe, said on Friday that the yen had strengthened too much. Nissan fell 3.6 percent to 863 yen. Consumer electronics maker Pioneer Corp tumbled 8.8 percent to 1,050 yen after it said on Friday that it would fall into the red for the fourth straight year on costs to scrap production of plasma displays as it rejigs its strategy in the cut-throat flat TV market.
Its slide was further fed after JP Morgan said on Monday it was lowering its price target to 1,000 yen from 1,210 yen and its 2008/09 net profit forecast to a loss of 4.6 billion yen ($45 million) from a profit of 8.2 billion yen.
Defensive shares were the name of the day, with Japan Tobacco (2914.T: Quote, Profile, Research) gaining 5.1 percent to 559,000 yen, drugmaker Astellas Pharma climbing 2.4 percent to 4,250 yen and fellow pharmaceuticals maker Eisai Co Ltd gaining 2.3 percent to 3,600 yen.
Brewer Sapporo Holdings Ltd jumped as much as 7 percent after U.S. fund Steel Partners said it would seek a smaller stake in Sapporo and offer a higher price per share, but ultimately closed up 2.5 percent at 792 yen.
Steel Partners said it is now willing to offer 875 yen per share for a 33.3 percent stake, compared with its widely watched February 2007 offer of 825 yen per share for 66.6 percent of the company.
Trade picked up, with 2.2 billion shares changing hands, compared with last week's average of 2.05 billion. Declining shares beat advancing ones by nearly five to one.
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