CORRECTED - CORRECTED-Japan stocks down 4 pct, credit fears still abound

(Corrects paragraph 18 to clarify that a strong yen makes exporters goods less competitive not more competitive)

(Adds stocks, details)

By Elaine Lies

TOKYO, March 17 (Reuters) - Japanese stocks fell over 4 percent on Monday as the dollar hit a 13 year low against the yen and the acquisition of Bear Stearns by JPMorgan Chase underscored the severe problems in the U.S. financial system.

The slide in stocks, which took the Nikkei to its lowest since August 2005, also came despite the announcement of a Federal Reserve discount rate cut, which market players said was unlikely to be more than a stop-gap move.

JPMorgan Chase & Co (JPM.N: Quote, Profile, Research, Stock Buzz) said it would buy Bear Stearns for just $2 a share, in a deal under which the Federal Reserve will provide special funding. [ID:nN16640873]

After an initial bounce, the dollar fell below 97 yen <JPY=>, knocking exporters such as Toyota Motor Corp (7203.T: Quote, Profile, Research, Stock Buzz) lower, while Mitsubishi UFJ Financial Group (8306.T: Quote, Profile, Research, Stock Buzz) and other banks were battered on continuing worries about global credit.

After the close of morning trade, it fell even further to below 96 yen. Electronics maker Hitachi Ltd (6501.T: Quote, Profile, Research, Stock Buzz) tumbled hard after it said it would post its second straight annual net loss and that a strong yen would make a tough 2008 even tougher [ID:nT305155].

"It's the strong yen. Period. End of story," said Masayoshi Okamoto, head of dealing at Jujiya Securities.