Nikkei falls 1.9 percent on U.S. worries

By Taiga Uranaka

TOKYO (Reuters) - Japan's Nikkei share average fell 1.9 percent on Friday, led down by exporters such as Canon Inc after weak economic data fueled fears of a possible U.S. recession.

KDDI Corp tumbled, becoming the biggest single drag on the benchmark average after Japan's No. 2 mobile carrier announced a new discount plan, raising fears that more price cuts might follow, which would squeeze profits.

The market's fall came after a sharp gain in the previous session, which in turn was a rebound from a steep decline the day before.

Market participants said they were seeing a tug-of-war between optimism and pessimism in the highly volatile market.

"Investors become by turns happy and sad," said Yoshihiro Ito of Okasan Capital Management. "Today, stocks are being sold on fresh worries about the U.S. economy following the Philadelphia" report.

The Philadelphia Federal Reserve Bank's business activity index for the mid-Atlantic region in February slumped to its lowest level since 2001, the time of the last U.S. recession.

The reading was worse than even the most pessimistic Wall Street forecast, and suggested economic deterioration is occurring even faster than many had expected.

The Nikkei ended the morning session down at 13,423.94 and the broader TOPIX index was down 1.5 percent at 1,314.44.