Japan stocks down on shippers, machinery companies

(Updates to midafternoon)

TOKYO, Dec 4 (Reuters) - Japanese stocks slipped on Tuesday, dragged down by machinery firms and shipping companies such as Mitsui OSK Lines Ltd (9104.T) after renewed worries about the U.S. economy pulled Wall Street lower. Yahoo Japan (4689.T) defied the bearish mood to rise on news of a link-up with eBay Inc (EBAY.O), which also fuelled gains in Softbank Corp (9984.T).

"Shipping firms have fallen due to the fact that you can't really expect too much from next year -- oil prices are high and the U.S. economy is slowing down," said Norihiro Fujito, general manager, investment research and information division of Mitsubishi UFJ Securities.

Tokyo shares languished as last week's flurry of short-covering on expectations of a U.S. rate cut when the Federal Reserve meets on Dec. 11 ran out of steam, with the market top-heavy around 15,800, just above Monday's high.

U.S. Treasury Secretary Henry Paulson said on Monday he hoped a plan to help homeowners facing mortgage-rate spikes would be ready by the weekend and expressed faith the economy would dodge a recession despite the deep housing slump. [ID:nN03421142]

But Tokyo market participants said investors were deciding to wait and see ahead of an announcement on the plan, and this was depressing trade. "This is a basically a good idea, but the big question is who's going to assume the financial burden for the plan. It's hard to give it positive reviews at this point," said Fujito.

"It will help, but it certainly won't be the whole solution to the subprime problem."

At 0437 GMT the benchmark Nikkei .N225 was down by 0.7 percent, or 102.96 points, at 15,526.01. The broader TOPIX was down by 0.7 percent at 1,520.83.

SHIPPERS WALLOW, MACHINERY SLIDES

Tokyo's index of sea transport firms .ISHIP.T was down by 5.2 percent, the biggest decline among the exchange's 33 sector indexes, hit by a ratings cut on Nippon Yusen KK (9101.T) in addition to broader concerns about the U.S. economy.

Credit Suisse on Friday cut its rating on Nippon Yusen to "neutral" from "outperform," saying earnings would likely see a sharp decline in the year to March 2009 due to a peak-out in dry bulk rates, a stronger yen and higher fuel costs.

Nippon Yusen fell 3.1 percent to 909 yen. Shares of Mitsui OSK Lines fell 5.9 percent to 1,501 yen and Kawasaki Kisen Kaisha Ltd (9107.T) dropped 5.7 percent to 1,198 yen after Credit Suisse cut price targets on both stocks.

Komatsu (6301.T), the world's No. 2 maker of earth-moving equipment, slipped 5.7 percent to 3,170 yen, the biggest drag on the Nikkei 225, while industrial robot maker Fanuc Ltd (6954.T) lost 2.1 percent to 11,060 yen.

Yahoo Japan was up 1.7 percent at 55,300 yen after news that it and eBay would link up their auction sites to make cross-border bidding easier, in a deal that will give U.S. auction titan eBay another chance to woo lucrative Japanese consumers. (Reporting by Elaine Lies; Editing by Mike Miller)