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: Quote, Profile, Research, Stock Buzz) 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: Quote, Profile, Research, Stock Buzz) 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: Quote, Profile, Research, Stock Buzz) 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.