UPDATE 2-Japan financials' subprime losses $8 bln-regulator

(Adds numbers for securitised products, details)

TOKYO, June 6 (Reuters) - Losses from investments tied to the U.S. subprime-mortgage market cost Japanese financial firms about $8 billion as of the end of March, Japan's financial regulator said on Friday, up 42 percent from December.

Total exposure to subprime-related investments came to 1 trillion yen ($9.4 billion) by that date, down a third from three months earlier, the Financial Services Agency said.

Although many Japanese firms have avoided the subprime damage that has torn through global rivals such as UBS AG (UBSN.VX) and Merrill Lynch MER.N, some of Tokyo's biggest banks have been heavily bruised.

Mizuho Financial Group (8411.T), Japan's second-largest lender, lost 645 billion yen ($6.1 billion) on subprime-related investments in the year to March 31, almost half of it in the January-March quarter.

While they may have skirted the worst of the subprime crisis so far, Japanese financials still have a hefty exposure to securitised products overall, the data showed.

Structured products such as residential mortgage-backed securities and collateralised debt oblidations are securities backed by a pool of loans or bonds with differing risk profiles.

Those products backed by risky mortgages are considered subprime.

Japanese financials lost 850 billion yen ($8 billion) as of the end of March, the FSA said, compared with 600 billion by the end of December.

The FSA's numbers include both actual and unrealised losses on subprime investments. Unless a financial product falls sharply in value, firms are not required to book the decline as a loss.

Large Japanese banks had subprime-related losses of 775 billion yen as of the end of March and held subprime-related investments worth 933 billion yen, the data showed.

Soured investments related to securitised products cost Japanese financials 2.4 trillion yen by March 31, the FSA said.

Japan's remaining exposure to securitised products totalled 22.8 trillion yen by that date, the regulator said. ($1=105.90 Yen) (Reporting by Reiji Murai and David Dolan; Editing by Michael Watson)