Nikkei down 2.9 pct as recession fears hit exporters

(Updates to midmorning)

TOKYO, April 14 (Reuters) - Japan's Nikkei stock average fell 2.9 percent on Monday, with exporters such as Canon Inc (7751.T) hit hard by a stronger yen and further evidence that the United States may be in recession.

One bright spot was Takashimaya Co Ltd (8233.T) after the department store operator said its operating profit rose 11.3 percent to 37.7 billion yen ($372 million) for the year just ended, boosted by increased sales at a revamped store in Tokyo and the solid performance of its Singapore operation.

The benchmark Nikkei average .N225 shed 388.51 points to 12,935.22 as of 0033 GMT. It ended up 2.9 percent on Friday, ending a three-day losing streak, and gained 0.2 percent for the week.

The broader TOPIX index declined 2.7 percent or 34.59 points to 1,244.03.

General Electric Co (GE.N) posted an unexpected 6 percent drop in first-quarter profit on Friday, the biggest shock yet to an American industrial bellwether from the credit crisis and the latest sign the U.S. economy may be in a recession. [ID:nN11436648]

"General Electric's results must be evidence of an eroding U.S. economy," said Fujio Ando, a senior managing director at Chibagin Asset Management.

"It came earlier than expected that a non-financial company's report has felt the impact of the credit crisis, although I had expected it from European and U.S. financial institutions."

U.S. data also showed that consumer sentiment in early April fell to its lowest level in 26 years.

The dollar rose as high as 101.97 yen JPY= earlier, up from around 101.00 yen in late New York trade, but later trimmed its gains to stand at 101.25 yen.

Japan's exporter shares lost ground, with Canon down 3.5 percent at 4,680 yen and Sony Corp (6758.T) losing 4.3 percent to 4,060 yen, while Honda Motor Co Ltd (7267.T) gave up 3.6 percent to 2,795 yen.

Takashimaya climbed 3.8 percent to 1,225 yen. ($1=101.25 yen)

(Reporting by Aiko Hayashi; Editing by Brent Kininmont)