* Credit woes in Dubai, Greece weigh on confidence - analyst
* Sharp rebound rally may have come to an end - analyst
* Suzuki down after Volkswagen deal announcement
By Aiko Hayashi
TOKYO, Dec 10 (Reuters) - Japan's Nikkei average fell 1.1
percent on Thursday after a recent sharp rebound, as credit
troubles overseas weighed on investor confidence and a stronger
yen pressured shares of exporters.
Suzuki Motor <7269.T> skidded nearly 5 percent, erasing the
gain logged Wednesday on hopes for an alliance agreement with
Volkswagen, after an analyst said valuations for the stock had
risen too high. The deal was announced after the closing bell on
Wednesday. []
Ratings agency Standard & Poor's on Wednesday warned that
Spain risks a debt downgrade in two years if the government does
not take tough action on its fiscal deficit. []
Fitch Ratings has already downgraded Greece, while Moody's
cut the ratings of six Dubai-linked issuers after concluding that
no "meaningful" government support would be provided to top firms
like DP World. [] []
"Credit worries in places like Dubai and Spain are curbing
investors' appetite to keep buying stocks, sending the market
lower," said Soichiro Monji, a chief strategist at Daiwa SB
Investments.
"We still don't know whether these problems will persist for
a long time, but they are clearly putting a lid on the global
stock market at the moment," Monji said.
The benchmark Nikkei <> had lost 105.61 points to
9,899.11 by midafternoon.
It fell 1.3 percent the previous day to end at 10,004.72,
above the 25-day moving average of around 9,700 but slipping for
a second day after having gained nearly 12 percent in a six-day
rally to Monday.
The broader Topix <> retreated 1 percent to 876.43.
"There's a growing view in the market that the sharp rally we
saw recently has almost run its course," said Tsuyoshi Segawa, an
equity strategist at Mizuho Securities.
"Investors appear to be unwinding their risk-taking
positions, partly triggered by rising credit worries in Europe
and the Middle East."
The dollar <JPY=> trimmed earlier gains to trade below 88
yen. Investors fret about a stronger yen because it eats into
exporters' overseas profits.
SUZUKI DOWN, SANYO JUMPS
Suzuki dropped 4.6 percent to 2,260 yen.
"We believe the firm will benefit from the technology
alliance with Volkswagen, but anticipation of tie-up news has
already driven its valuation...considerably higher" than those of
its Japanese rivals, said Morgan Stanley analyst Noriaki
Hirakawa.
Among other exporters, Honda Motor Co <7267.T> slipped 1.3
percent to 2,935 yen and Toyota Motor Corp <7203.T> shed 1.1
percent to 3,670 yen. Tokyo Electron Ltd <8035.T> retreated 2.6
percent to 5,320 yen.
But Sanyo Electric <6764.T> jumped 6.9 percent to 170 yen
following the closure of Panasonic Corp's <6752.T> tender offer
the previous day, with Panasonic expected to take a majority
stake, leading to synergies between the two electronics firms.
The share rise also follows news of Suzuki's announcement of
an alliance with Volkswagen, which develops lithium-ion batteries
with Sanyo, raising hopes that Sanyo's batteries could be used in
more cars.
Construction firm Obayashi Corp <1802.T> added 1 percent to
293 yen after Credit Suisse upgraded it to "outperform" from
"neutral", citing a gradual recovery in demand for private-sector
capital spending as well as a recovery in real estate development
earnings.
(Editing by Chris Gallagher)
