Japan stocks tumble more than 4 pct to new 2-yr low
(Updates to midmorning)
By Elaine Lies
TOKYO, Jan 22 (Reuters) - Japanese stocks tumbled more than 4 percent on Tuesday, hitting new 2-year lows, as investors followed others around the world in dumping stocks on growing fears the U.S. economy was headed for recession. The yen hit a 2-½ year high against the dollar, sending big exporters Toyota Motor Corp (7203.T) and Honda Motor Corp (7267.T) down more than 5 percent. Sony Corp (6758.T) and Canon Inc (7751.T) also tumbled with banks also hit.
"Everything is being sold, and everybody's selling," said Takashi Ushio, head of the investment strategy division at Marusan Securities, as the Nikkei average .N225 took its losses to 17 percent so far this year.
Stocks around the world plunged on Monday, and market participants said eyes would be on Wall Street, after it returns from a long weekend on Tuesday.
U.S. stock index futures sank in holiday-shortened trading in New York on Monday, indicating Wall Street was likely to join the global equity market plunge when trading resumes on Tuesday.
"If Wall Street falls again today, and the U.S. government doesn't come up with some sort of policy response, we have to accept that there will be still more falls," Ushio said. "They need to do something dramatic."
U.S. President George W. Bush has called for an economic stimulus plan worth up to $150 billion in tax cuts and other measures, but world sharemarkets have plunged on fears it is not enough to stave off a recession in the world's largest economy.
At 0045 GMT the Nikkei was down 4.39 percent at 12,740.34, below the 13,000 level to its lowest since September 2005.
The broader TOPIX was down 4.4 percent at 1,236.61.
Toyota fell 5.3 percent to 4,980 yen and Honda fell 5.5 percent to 2,925 yen, with other exporters showing similar losses as investors fretted both about slowing sales in the United States and reduced returns from a higher yen.
Financial firms were also big losers. Nikko Cordial Corp 8603.T fell 8.7 percent to 1,391 yen and Sumitomo Mitsui Financial Group (8316.T) fell 5.1 percent to 720,000 yen.
