Japanese stocks fall, Olympus plunges on outlook

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By Taiga Uranaka

TOKYO, Feb 5 (Reuters) - Japanese stocks fell on Tuesday with Olympus Corp (7733.T: Quote, Profile, Research, Stock Buzz) heading for its biggest one-day loss in six years on a weak outlook, helping sour market sentiment.

Yahoo Japan Corp (4689.T: Quote, Profile, Research, Stock Buzz) jumped for a second day following Microsoft Corp's (MSFT.O: Quote, Profile, Research, Stock Buzz) $44.6 billion bid for Yahoo Inc (YHOO.O: Quote, Profile, Research, Stock Buzz).

Market participants said the fall was mostly a reaction to the previous day's gains and to losses on Wall Street, pointing to a lack of factors to power a sustained rise.

"There is strong downward momentum in the market. It will take a huge amount of energy to reverse that," said Hiroshi Arano, an adviser at Mizuho Asset Management.

"The market is likely to hover around the bottom for the next few months unless some totally unexpected news comes, something that shows foreign investors that it's too early to write off Japanese companies," he said.

The benchmark Nikkei average .N225 ended the morning session down 1.2 percent at 13,688.01. The broader TOPIX index lost 1.1 percent to 1,349.63.

Amid mounting concerns over the economic outlook, companies with poor results or forecasts were roundly punished by investors.