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*Nikkei set for 10th days of losses, longest since 1965
*Trading houses sold as investors lock in recent profits
*Shippers extend losses
By Elaine Lies
TOKYO, July 2 (Reuters) - Japan's Nikkei average fell 1
percent on Wednesday, heading for its longest losing streak in
more than 40 years as worries about the global economy
intensified, with Canon Inc <7751.T> and other exporters hurt by
a stronger yen.
Shippers extended recent losses on concerns that the sector
could fall further, while trading houses that had seen recent
sharp gains on high oil prices slid as investors locked in
profits.
The fall took some in the market by surprise, as the
benchmark Nikkei <> opened higher and had been predicted to
rise after U.S. stocks gained on Tuesday.
"Though Wall Street rose yesterday, the fundamental problems
with the U.S. economy remain, and it's hard to imagine that we'll
see a rebound after U.S. jobs data comes out on Thursday," said
Norihiro Fujito, general manager at Mitsubishi UFJ Securities.
"The economies of a lot of emerging markets, which Japan
counted on even if the U.S. was doing poorly, are now being hit
as well. This slowing, and inflation, may have a delayed impact
on Japan but an impact is unavoidable," he said.
Signs of an economic slowdown in emerging markets, key for
Japan's export-oriented economy, have dented investor
sentiment.
"People are growing so nervous now that they're selling on
the slightest of worries," said Fujio Ando, senior managing
director at Chibagin Asset Management.
One of the biggest negative factors remained oil, which on
Wednesday rose above $142 <Clc1> per barrel and was at $142.26 by
0204 GMT.
But trading houses and energy firms, which were boosted
earlier this week by oil's surge and helped to slow the Nikkei's
slide, slipped as investors took profits.
The benchmark Nikkei <> was down 0.97 percent at
13,331.98, heading for its 10th straight negative day and its
longest losing streak since early 1965.
The broader Topix <> was down 1.1 percent at 1,305.60
after coming close to slipping below 1,300 for the first time
since April 23.
SHIPPERS SINK
"The biggest problem is that it's hard to know where the U.S.
will touch bottom," said Fujito, noting that major U.S. banks are
set to start announcing results in several weeks.
Investor window-dressing that may have artificially supported
the Japanese market just before the end of the first half of the
calendar year on Monday has also evaporated, he said.
Shippers extended losses, fed by a drop in freight charges on
the Baltic Dry Index <.BADI> by 2.2 percent.
Nippon Yusen KK <9101.T>, Japan's largest shipping firm, fell
2.5 percent to 1,002 yen and Kawasaki Kisen <9107.T> slid 2.3
percent to 979 yen. Mitsui OSK Lines <9104.T> was down 2.7
percent at 1,453 yen.
Some exporters also lost ground as the dollar slipped below
106 yen <JPY=>. Canon shed 2.1 percent to 5,230 yen, becoming the
second-biggest drag on the Nikkei 225 by volume weight. Honda
Motor Corp <7267.T> fell 1.1 percent to 3,600 yen and Toyota
Motor Corp <7203.T> was down 1 percent at 4,960 yen.
Trading houses fell, with Marubeni Corp <8002.T> down 3.5
percent at 873 yen and Mitsubishi Corp <8058.T> down 0.8 percent
at 3,590 yen.
Kirin Holdings Co <2503.T> fell 3.4 percent to 1,585 yen
after the Nikkei business daily said the Japanese brewer would
likely report a 28 percent rise in its January-June profit,
missing its forecast of a 38 percent jump, due to
weaker-than-expected growth at its soft drink unit.
Trade picked up on the Tokyo exchange's first section, with
958 million shares changing hands compared with last week's
morning average of 848 million.
Declining stocks outnumbered advancing ones by a ratio of 7
to 1.
(Editing by Michael Watson)
