TOKYO Japan's Nikkei average sagged 1.5 percent on Tuesday, although it managed to hold above the 13,000-mark, as concerns over stumbling global growth pushed U.S. stocks to their worst day in five months.
Index heavyweight SoftBank Corp (9984.T) slumped 8.2 percent to a two-week low after U.S. Dish Network Corp (DISH.O) offered to buy wireless service provider Sprint Nextel Corp (S.N) for $25.5 billion, which could trump SoftBank's bid for a 70 percent stake for $20.1 billion.
It was the second-most traded stock on the main board by turnover.
The Nikkei .N225 was down 200.22 points at 13,075.44 after earlier hitting a low of 13,004.46 to a one-week low.
It was on track to fall for a third day in a row, which will mark its longest such losing streak in nearly three months as the benchmark has rallied nearly 26 percent this year on the back of aggressive government and central bank policies to revive the world's third-largest economy.
In recent sessions, concerns about soft data from China and the United States have heightened worries about the global growth outlook. Investors in Japan have used this period to book gains after the market surged to near five-year highs last week.
Chinese growth stumbled unexpectedly in the first three months of 2013, while data showed the pace of growth in New York state manufacturing slowed more than expected in April and U.S. homebuilder sentiment waned for a third month in a row.
Sentiment was also dimmed by two simultaneous explosions that ripped through the crowd at the finish line of the Boston Marathon on Monday, killing two people and injuring dozens. [ID:nL2N0D21S8] U.S. stocks extended their losses as the news weighed on already jittery markets. Overnight, gold led a broad rout for commodities on growth worries, dropping 9 percent to mark its biggest loss since 1983.
Nicholas Smith, Japan strategist at CLSA, said he remained upbeat on Japanese stocks and expected another 30 percent upside for the Nikkei.
"They started off incredibly cheap. They are still cheap," he said. "There is a substantial upturn in the economy and conditions for Japanese companies."
The BOJ shocked the financial markets on April 4, with bolder steps that even eclipsed the U.S. Federal Reserve's massive quantitative easing program, promising to inject $1.4 trillion into the economy in less than two years.
In terms of valuations, Japanese equities carry a 12-month forward price-to-earnings ratio of 13.3, slightly below the S&P 500's 13.5, data from Thomson Reuters Datastream showed.
Stocks that have rallied hard on the back of the BOJ's sweeping stimulus took a battering on Tuesday, with the banking sector .IBNKS.T, which is seen benefiting from Japan's reflationary drive, down 3.2 percent as the worst sectoral performer.
Lenders Mitsubishi UFJ Financial Group (8306.T) fell 3.5 percent, and Sumitomo Mitsui Financial Group (8316.T) eased 2.7 percent.
The broader Topix .TOPX index dropped 1.8 percent to 1,113.33 in mid-morning, with volume at 42 percent of its full daily average for the past 90 trading days.
Apart from concerns of weakening global demand, exporters also faced pressure from the yen's rebound. The Japanese currency was quoted at 97.0 yen to the dollar on Tuesday after gaining 1.7 percent to 96.725 in the previous session.
Exporters Toyota Motor Corp (7203.T), Nissan Motor Co (7201.T), Sony Corp (6758.T) and semiconductor equipment maker Tokyo Electron (8035.T) lost between 2.7 and 5.3 percent.
(Editing by Shri Navaratnam)