Crisis drives Nikkei below 10,000 to 5-year low

(Updates to midmorning)

By Elaine Lies

TOKYO, Oct 7 (Reuters) - Fears surrounding the global financial crisis drove Japan's Nikkei stock average down more than 5 percent on Tuesday to a five-year low below 10,000, before some bargain hunters emerged to erase some of the losses.

A stronger yen, holding near a six-month high against the dollar hit on Monday, hurt exporters such as Canon Inc (7751.T) and automakers, whose earnings have been badly undercut by the worsening economy overseas. FXNEWS [FRX/]

"The market's been in a panic situation since last week, and a lot of people are moving into cash," said Koichi Ogawa, chief portfolio manager at Daiwa Asset Management. "It's not really moving on sense, there are a lot of people who may have no choice but to sell."

But he and other market participants said that by falling below 10,000, the Nikkei had more than reached a level at which a rebound might be expected, tracking similar moves on Wall Street.

At 0109 GMT the benchmark Nikkei .N225 was down 3.5 percent at 10,106.16. The broader Topix was down 3.8 percent at 961.33.

A sense that the shares had now become cheap prompted some light bargain-hunting that lifted the Nikkei from a low of 9916.21, its lowest since December 2003. (Editing by Rodney Joyce)