Nikkei hits 5-½ year low as recession fear,yen bite

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TOKYO, Oct 23 (Reuters) - The Nikkei average fell 6.6 percent on Thursday and hit its lowest point in more than five years, with exporters such as Canon (7751.T) battered by a firmer yen and fears over the global economy.

NEC Corp's (6701.T) shares tumbled more than 11 percent after the Japanese electronics maker cut its annual operating profit forecast by 29 percent, hit by sluggish mobile phone sales and rapidly deteriorating demand for microchips. [ID:nT366324]

"We now have a situation where investors can't avoid admitting the spread of the global recession," said Kenichi Hirano, operating officer at Tachibana Securities.

"A strong yen is also a huge blow to Japanese exporters as it will certainly hurt their earnings."

As of 0114 GMT, the Nikkei was down 549.88 points to 8,124.812, after touching its lowest point since May 2003.

The broader Topix declined 5.5 percent to 840.55.

Data also showed on Thursday that Japan's exports grew only slightly in September from a year earlier as the spreading effects of the global financial crisis take their toll on demand for Japanese goods. [ID:nT287354]

"The global slowdown has had a clear impact on Japan's exports, and this was even before the financial crisis erupted in September," said Tatsushi Shikano, senior economist at Mitsubishi UFJ Securities.

"As the financial crisis takes its toll on the real economy not only in the United States but also in Europe and Asia, export volumes will continue to fall in October-December and January-March."

EXPORTERS BATTERED

The euro slid as low as 124.15 yen EURJPY=R, its lowest since January 2003, as concerns about the worsening global economy prompted investors to dump risky assets. The dollar was down 0.3 percent at 97.40 yen JPY=.

Investors fret over a stronger yen as it curbs exporters' overseas profits when they are brought home.

Canon dropped 8.8 percent to 2,965 yen and Sony Corp (6758.T) lost 8 percent to 2,255 yen, while Honda Motor Co (7267.T) skidded 9.3 percent to 2,050 yen and Toyota Motor Corp (7203.T) fell 6.2 percent to 3,310 yen.

Shares of NEC lost 11.2 percent to 293 yen.

A rare bright spot was KDDI Corp (9433.T) after the Japanese phone operator reported a 27 percent gain in quarterly profit on lower handset subsidies and kept its full-year forecast, underscoring its relatively stable earnings profile amid tough economic times. [ID:nT339901]

Shares of KDDI gained 1.1 percent to 531,000 yen to become the top positive contributor to the Nikkei 225. (Reporting by Aiko Hayashi; Editing by Hugh Lawson)