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By Taiga Uranaka
TOKYO, Dec 18 (Reuters) - Japanese stocks fell for a fifth day on Tuesday, with exporters such as Canon Inc (7751.T) sold on growing uncertainty about the U.S. economy.
In a volatile session with light turnover, bank shares including Mitsubishi UFJ Financial Group Inc (8306.T) took a roller-coaster ride before ending higher.
"Today, pessimistic views on U.S. economy got an upper hand in the market," said Hitoshi Yamamoto, CEO of Fortis Asset Management Japan.
"But it's difficult to talk about the market at this time of the year. Foreign investors are effectively on vacation, and the overall market is more prone to be moved by index futures trades."
Symbolic of the day's choppy market were bank shares.
No. 1 Mitsubishi UFJ Financial Group Inc fell as much as 2.5 percent immediately after the open but rose 2.9 percent later, pushing indexes to a positive territory briefly in the afternoon trade.
Mitsubishi UFJ, the day's most heavily traded stock, ended up 1.4 percent to 1,042 yen, while No. 2 Mizuho Financial Group (8411.T) rose 0.6 percent to 536,000 yen and third-ranked Sumitomo Mitsui Financial Group (8316.T) was up 0.6 percent at 830,000 yen.
Banks were among the hardest hit in the recent sell-off, with Mitsubishi UFJ losing 16.3 percent in the previous four sessions.
Trade was moderate, on par with last week's daily average of 2.1 billion shares changing hands.
Advancers and decliners were almost evenly matched.
Exporters were sold on growing uncertainty about the U.S. economic outlook, tracking overnight falls in U.S. industrial companies sensitive to business cycles, including heavy-equipment maker Caterpillar Inc (CAT.N).
Digital camera maker Canon fell 1.8 percent to 5,430 yen and electronic parts firm TDK Corp (6762.T) shed 2 percent to 8,180 yen. Caterpillar rival Komatsu Ltd (6301.T) plunged 4.4 percent to 2,925 yen.
U.S. stocks tumbled on Monday on concerns that a persistent housing slump, combined with surging prices, posed the threat of 1970s-style stagflation.
Stagflation is a period of rising prices amid stagnant consumer demand, lack of growth in output and high unemployment.
Its advent could pose a dilemma for the Federal Reserve as policies aimed at boosting growth could fuel inflation, while policies to fight inflation could hobble an economy grappling with the housing slump.
On a bright spot, steelmakers rose after an industry source said on Wednesday that Japanese shipbuilding companies have agreed to a 10 percent price rise for Nippon Steel Corp's (5401.T) thick plate, effective Oct. 1.
Nippon Steel, the world's second-biggest steelmaker, rose 1.8 percent to 616 yen and Sumitomo Metal Industries Ltd 5405.T ended up 0.7 percent at 451 yen.
Heavy machinery maker IHI Corp (7013.T) surged 7.2 percent to 238 yen after Goldman Sachs gave it a "buy" rating. The rating had previously been suspended.
IHI's troubles surfaced in September when it shocked investors with a loss warning for the current financial term due to deteriorating margins on plant and engineering projects for which costs had spiralled out of control.
A subsequent earnings restatement prompted the Tokyo stock exchange to place the firm on its supervisory list.
"Both internal and external committees have concluded there were no fraudulent statements," analyst Kunio Sakaida wrote. "If delisting risk can be eliminated, we believe the stock is attractively valued." (Editing by Mike Miller)