Japan stocks to slide due to Lehman woes

By Taiga Uranaka

TOKYO, Sept 16 (Reuters) - The Tokyo stock market is likely
to fall sharply on Tuesday, led down by financial shares such as
top lender Mitsubishi UFJ Financial Group (8306.T) on heightened
credit concern following collapse of Lehman Brothers.

Wall Street had its worst day on Monday since markets
reopened after the September 11 attacks as fears about the U.S.
financial system's stability surged after investment bank Lehman
Brothers LEH.N filed for bankruptcy and insurer AIG (AIG.N)
struggled for survival. [ID:nN13574113]

"Lehman's bankruptcy was not expected. We might have been a
bit too optimistic," said Masayoshi Yano, senior market analyst
at Meiwa Securities. "Today, the Nikkei is likely to test this
year's low."

Nikkei futures traded in Chicago closed at 11,730 on Monday,
440 points below the close in Osaka JNIc1, pointing to a
significantly lower opening.

The Nikkei marked its lowest close this year at 11,787.51 on
March 17, when the global market was hit by financial turmoil
over Bear Stearns.

Market participants expect the Nikkei .N225 to trade
between 11,600 and 11,900. It ended almost flat for the week last
week.

Japanese markets were closed on Monday for a national
holiday.
----------------------MARKET SNAPSHOT @ 2256 GMT ------------

INSTRUMENT LAST PCT CHG NET CHG
S&P 500 .SPX 1192.7 -4.71% -59.000
USD/JPY JPY= 104.32 -0.24% -0.250
10-YR US TSY YLD US10YT=RR 3.4067 -- 0.000
SPOT GOLD XAU= 784.85 -0.17% -1.350
US CRUDE CLc1 94.24 -1.54% -1.470
DOW JONES .DJI 10917.51 -4.42% -504.48
-------------------------------------------------------------
> Wall Street mauled by Lehman bankruptcy, AIG fears [.N]
> Dollar falls vs euro with U.S. stocks on Lehman [USD/]
> Bonds soar as financial angst spurs safety bids [US/]
> Gold ends sharply higher in safe-haven play [GOL/]
> Oil drops over $5 on financial turmoil, Ike [O/R]
STOCKS TO WATCH

-- Aozora Bank (8304.T), Shinsei Bank Ltd (8303.T), other
Japanese banks.

Several Japanese banks were named as holding unsecured claims
to Lehman, which filed for bankruptcy protection on Monday,
becoming the largest and highest-profile casualty of the global
credit crisis. [ID:nN15469897]

The bankruptcy filing listed Aozora with loans worth $463
million to Lehman as of July 2. Mizuho Corporate Bank was listed
as having $382 million in exposure, Shinsei $231 million, UFJ
Bank Ltd $185 million, Sumitomo Mitsui Banking Corp $177 million,
and Chuo Mitsui Trust & Banking with $93 million.

The chief financial officer of Aozora told Reuters that its
exposure to Lehman will be "significantly lower" than what
appears in filing, due to collateral and hedging. [ID:nT336272]

Separately Aozora on Friday said it would miss its full-year
forecast by nearly 43 percent, squeezed by rising bad loans and
the absence of an expected tax benefit. [ID:nT157910]

-- Takashimaya Co (8233.T), Daiei Inc (8263.T)

Retailers Takashimaya and Daiei lowered their annual profit
forecasts to below market expectations on Friday as a slowdown in
consumer spending has hurt their sales. [ID:nT361432]

-- Sumitomo Heavy Industries (6302.T)

Axcelis Technologies Inc (ACLS.O) said Sumitomo Heavy has
shelved its plans to buy the semiconductor gear maker, sending
Axcelis' shares plunging 71 percent to their lowest ever.
[ID:nBNG327815]

-- Hino Motors Ltd (7205.T)

Nissan Diesel Motor Co plans to develop a cleaner-emission
truck with Swedish parent Volvo (VOLVb.ST) for introduction in
Japan as early as next year, the Nikkei business daily reported
on Monday.

Nissan Diesel currently buys truck engines from Hino but will
wind up that contract as it makes the switch to Volvo engines,
the Nikkei said.

-- Bridgestone Corp (5108.T) and other tyre makers

German tyre and car parts maker Continental (CONG.DE) warned
investors on Saturday that profits would be squeezed below what
it had forecast by sluggish car sales in Europe and North America
and rising raw material costs. [ID:nLD343582]

-- Canon Inc (7751.T)

Camera and office equipment maker Canon is expected to report
a 12 percent fall in group net profit for 2008, breaking an
eight-year run of higher earnings, the Nikkei business daily
reported on Saturday. [ID:nN12387932]
(Editing by Rodney Joyce)