Nikkei down 1.8 pct on Lehman, global economy fears
(Updates to midmorning)
TOKYO, Sept 10 (Reuters) - The Nikkei average fell 1.8 percent on Wednesday, led lower by financial shares after fears about Lehman's LEH.N ability to raise capital hammered Wall Street and refuelled concern about the credit crisis.
High-tech exporters such as Sony Corp (6758.T) slid on a firmer yen and after the Philadelphia Semiconductor Index .SOXX fell more than 3 percent, while shipping firms and trading houses lost ground on the worsening outlook for the global economy.
"Today's fall is a Lehman shock," said Yoku Ihara, manager of the investment information department at Retela Crea Securities.
"We thought the market would rebound after the Freddie and Fannie news, but Lehman rekindled worries and the Nikkei may have to test the year-low it hit on March 17."
Shares of Lehman, the No. 4 U.S. investment bank, skidded 45 percent on Tuesday, its biggest percentage slide since it went public in 1994, after news that talks about a possible investment in Lehman from Korea Development Bank had broken down. [ID:nN09324233]
The news doused Monday's optimism about the U.S. government's bailout of home finance firms Fannie Mae (FNM.N) and Freddie Mac (FRE.N) to boost the slumping housing market.
Lehman will announce its third-quarter results later in the day.
As of 0039 GMT, the benchmark Nikkei average .N225 had shed 224.32 points to 12,176.33. It booked its lowest point this year at 11,691.00 on March 17.
The broader Topix declined 1.4 percent to 1,174.81.
Japanese bank shares dropped, with industry leader Mitsubishi UFJ Financial (8306.T) falling 1.7 percent to 826 yen, while No.2 Mizuho Financial Group (8411.T) lost 3.7 percent to 440,000 yen.
In late trading in New York, the dollar dropped to a session low against the yen at 106.84 JPY=. Investors fret over a stronger yen as it curbs exporters' overseas profits when they are brought home.
Sony fell 2.5 percent to 3,830 yen and Canon Inc (7751.T) declined 3 percent to 4,500 yen.
Trading house Mitsubishi Corp (8058.T) skidded 4.4 percent to 2,475 yen, while shipper Mitsui OSK Lines (9104.T) slid 3.6 percent to 1,040 yen. (Reporting by Aiko Hayashi; Editing by Chris Gallagher)
