Japan stocks fall, exporters hit on recession worries

(Updates to midafternoon)

TOKYO, Feb 5 (Reuters) - Japanese stocks lost steam on Tuesday, with exporters such as Honda Motor Co Ltd (7267.T: Quote, Profile, Research, Stock Buzz) coming under pressure after downgrades of U.S. credit card firms fuelled recession fears.

Investors dumped stocks with disappointing earnings results. Olympus Corp (7733.T: Quote, Profile, Research, Stock Buzz) tumbled nearly 14 percent after cutting its outlook due to a stronger yen and falling camera prices.

A lack of measures by the Japanese government to deal with the slowing economy has also helped to sour market sentiment, said Fujio Ando, a senior managing director at Chibagin Asset Management.

"Ordinary investors can't wipe off the image that if the U.S. economy slows, Japanese exporters will be hit," he said, though he added that demand in Europe and Asia will likely make up for such a fall.

"Rather, I'm more concerned about next week. What if there won't be any interest rate cuts by the Bank of Japan and the G7 meeting ends up as just a gathering?"

The spectre of a U.S. recession on top of a festering crisis in financial markets will test the limits of cooperation among the Group of Seven industrial powers when G7 finance ministers and central bank chiefs meet on Saturday in Tokyo. [ID:nG7G8]

As of 0425 GMT, the benchmark Nikkei average .N225 was down 1.1 percent or 150.38 points at 13,709.32.

The broader TOPIX index was down 1 percent or 13 points at 1,351.72.