TOKYO (Reuters) - Japan’s Nikkei average fell 3.3 percent to a six-week low on Friday, with investors dumping blue-chip exporters such as Honda Motor Co Ltd on a stronger yen and fears of a U.S. recession, while silicon wafer maker Sumco Corp tumbled more than 10 percent after predicting weaker profits.
In a broad sell-off tracking sharp falls on Wall Street, banks such as Sumitomo Mitsui Financial Group took a beating after U.S. mortgage lender Thornburg Mortgage Inc said it failed to meet a $28 million margin call, the latest setback in the global credit crisis.
“The U.S. subprime situation is serious. I’m worried how the Tokyo market will move next week,” said Yoku Ihara, a manager in the investment information department at Retela Crea Securities.
Worries about a U.S. recession were heightened by a fresh batch of data including lackluster retail sales and a report showing mortgage foreclosures at a record high in late 2007.
“The mood is not good,” said Hiroaki Osakabe, a fund manager at Chibagin Asset Management.
“The market slide was bigger due to trade being thin. Depending on Friday’s U.S. employment data it could fall further,” Osakabe said.
Economists expect the non-farm payrolls report to show the U.S. job market rebounded in February from the previous month’s contraction, but not enough to keep the unemployment rate from rising.
During the afternoon session, the Japanese government nominated deputy central bank governor Toshiro Muto as the next head of the Bank of Japan, raising the prospect of a showdown with the opposition.
But the market mostly shrugged off the BOJ nomination, including chances of a policy vacuum if agreement is not reached before current governor Toshihiko Fukui retires on March 19.
“It’s just another symbol of the ongoing chaos in Japanese politics,” said Tomokatsu Mori, chief fund manager at Fukoku Capital Management.
The benchmark Nikkei average ended down 432.62 points at 12,782.80. The index fell 6 percent for the week.
The broader TOPIX index shed 3.1 percent to 1,247.77.
Honda fell 4.2 percent to 2,990 yen and electronic components maker TDK Corp lost 7.5 percent to 6,560 yen, the biggest drag on the Nikkei.
Among banks, industry leader Mitsubishi UFJ Financial Group fell 4.2 percent to 862 yen, No. 2 Mizuho Financial Group declined 5.8 percent to 390,000 yen and Sumitomo Mitsui Financial, the third-biggest bank, dropped 6.3 percent to 684,000 yen.
Shares of Sumco slid 10.8 percent to 2,065 yen after it forecast a 22 percent fall in operating profit this fiscal year, which started in February, due to a stronger yen, softening wafer prices and a heavier depreciation burden.
Steel stocks were among the hardest hit on concerns that steelmakers may not be able to fully pass on surging costs of raw materials such as iron ore and coal to end-users in the business year that starts next month.
Nippon Steel Co lost 5.1 percent to 484 yen, while JFE Holdings Inc fell 7.6 percent to 4,030 yen. The iron and steel subindex ISTEL.slid 5.4 percent.
Nippon Steel on Thursday cut its full-year profit forecast on higher freight and raw materials costs and said it expected a tough time in the next fiscal year due to tight supplies of coking coal.
Kyowa Hakko Kogyo Co Ltd extended gains, soaring 9.7 percent to 1,141 yen, after it sold rights to antibody KW-0761 CCR4 to U.S. biotech firm Amgen, prompting Mizuho Securities to raise its rating on the drug maker to “2” from “3”.
Under the deal, which covers the world except for Japan, China, South Korea and Taiwan, Kyowa Hakko will receive a one-off payment of $100 million and additional milestone payments up to $420 million.
Trade was moderate on the Tokyo exchange’s first section, with 2.1 billion shares changing hands, in line with last week’s daily average.
Declining stocks beat advancers by a ratio of more than eight to one.
Editing by Mike Miller