Japan stocks down as autos stall, Yahoo Japan jumps

(Adds comment, stocks)

By Aiko Hayashi

TOKYO, Dec 4 (Reuters) - Japanese stocks slipped on Tuesday, dragged down by machinery makers such as Komatsu (6301.T: Quote, Profile, Research, Stock Buzz) after weaker manufacturing data pushed down Wall Street, renewing worries about the U.S. economy.

But Yahoo Japan Corp's (4689.T: Quote, Profile, Research, Stock Buzz) link-up with eBay Inc (EBAY.O: Quote, Profile, Research, Stock Buzz) fuelled gains in Softbank Corp (9984.T: Quote, Profile, Research, Stock Buzz), which owns a big stake in the Japanese auctioneer.

Despite the market fall, market participants said the downside looks limited for Japanese stocks.

"Market sentiment is actually not bad as there's a possibility the subprime problems will come to an end on Paulson's plan," said Masaki Iso, chief investment officer at Yasuda Asset Management Co Ltd.

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 investors will watch U.S. stocks' moves as economic data there is not strong," Iso said.

Katsuhiko Kodama, a senior strategist at Toyo Securities, said the downside seemed limited, aided by an expected U.S. rate cut next week and the presence of foreign investors who increasingly see Japanese stocks as oversold.