* N. Korea tensions weigh on Asian stocks, including Nikkei
* Nikkei extends losses, hits lowest since early Dec
* Futures selling by foreigners pushing Nikkei down
By Aiko Hayashi
TOKYO, May 25 (Reuters) - Japan's Nikkei average dropped more
than 3 percent to its lowest in nearly six months on Tuesday, as
the euro fell further on worries that Europe's woes now included
the health of some banks in addition to sovereign debt problems.
The Nikkei's slide was part of a broad sell-off of risk
assets including other Asian shares, oil and higher yielding
currencies.
It was triggered in part by the Bank of Spain's take over of
a small savings bank, and exacerbated by news that North Korean
leader Kim Jong-il has ordered his military to be on a combat
footing. []
MSCI's broadest measure of Asia-Pacific shares outside of
Japan <.MIAPJ0000PUS> declined nearly 4 percent.
"The fallout on the financial system from the euro zone debt
crisis was what the market had feared the most and that's
happened," said Masaru Hamasaki, a senior strategist at Toyota
Asset Management.
"To add insult to the injury, we now have the Korean news.
The market tends to react differently to this type of news
depending on the day's sentiment, and it's in a position to take
everything negatively."
The benchmark Nikkei <> was down 2.9 percent at
9,479.54, after falling as much as 3.1 percent to its lowest
since early December. It has lost more than 16 percent since
hitting an 18-month high of 11,408.17 in early April.
The broader Topix <> fell 2.2 percent to 860.54.
Market jitters come despite recent indications of U.S. and
global economic growth. Sales of previously owned U.S. homes rose
more than expected in April to a five-month high, an industry
group said on Monday. []
"We've seen good indicators such as U.S. home sales
recently, and corporate earnings were good, but it's impossible
to avoid worries that the troubles in Europe will spread,
dragging on regional and then global growth," said Takashi Ushio,
head of the investment strategy division at Marusan Securities.
Heavy selling of futures was dragging the overall market
lower, with foreign investors, likely from Europe, thought to be
some of the biggest sellers, analysts said.
Other market players said it appeared that some investors,
including European and Asian investors might be pulling out of
the market to cut back on risk.
"We're also unlikely to see the same sort of big buying from
foreign investors that we saw earlier this year, since many that
had to buy at that point such as pension funds have already
reached their investment goals," said Kenichi Hirano, operating
officer at Tachibana Securities.
The euro slipped 0.7 percent to around around 110 yen
<EURJPY=R>. Many Japanese exporters have set their currency
assumption rates for the pair at 120-125 yen.
Tokyo Electron Ltd <8035.T> dropped 3.8 percent to 5,130 yen
and Kyocera Corp <6971.T> shed 2.9 percent to 7,830 yen.
Shares of Canon Inc <7751.T> declined 2.7 percent to 3,610
yen. The company said it will freeze plans to develop flat panel
televisions based on SED (surface-conduction electron-emitter
display) technology.
The firm will continue developing SED TVs for commercial use,
the spokesman said.
Textile firm Toray Industries <3402.T> tumbled 9 percent to
454 yen after it said would raise $1.2 billion from the sale of
new and existing shares. []
But shares of Renown Inc <3606.T> surged 12 percent to 214
yen after Chinese textile group Shandong Ruyi said it will buy a
41 percent stake in the Japanese apparel maker, the latest in a
series of investments by Chinese firms in Japan. []
The stock had already ended the previous day up 35.5 percent
after weekend media reports of the deal.
(Additional reporting by Elaine Lies; Editing by Edwina Gibbs)
