(Adds stocks, details)
By Elaine Lies
TOKYO, Jan 22 (Reuters) - Japanese stocks tumbled more than 4
percent to a 28-month low on Tuesday as investors followed others
around the world to dump stocks on growing fears that the U.S.
economy is heading for recession.
The yen hit a 2-1/2-year high against the dollar [],
sending big exporters Sony Corp <6758.T>, Toyota Motor Corp
<7203.T> and Honda Motor Corp <7267.T> down more than 5 percent.
Bank shares were also hit hard.
"It's like a funeral in here," said Ken Masuda, senior
equities dealer at Shinko Securities, as the Nikkei share average
<> took its losses to 17 percent so far this year and 30
percent over the last six months.
"No one knows what is going to happen tonight in New York.
It's like we've gone blind -- you don't know what's coming. Until
we see New York, all we can do is sell."
U.S. stock index futures sank in holiday-shortened trading in
New York on Monday, indicating Wall Street was likely to join the
global equity market plunge when trading resumes on Tuesday.
The Nikkei was down 4.41 percent at 12,738.31, its lowest
since early September 2005, down 587.63 points. It shed 600
points before light bargain-hunting emerged.
The broader TOPIX <> was down 3.98 percent at 1,242.22.
"We've been seeing some panic selling, and the Nikkei has
fallen one by one through its support levels," said Noritsugu
Hirakawa, a strategist at Okasan Securities who said that,
according to technicals, the next big support line is at 12,500.
Some bargain hunting emerged late in the morning as the
dollar recouped some losses against the yen, climbing back above
106 yen and heping the market trim its losses slightly.
But market players were warily watching the movements of
other Asian markets, with large falls there seen further
pressuring the Nikkei amid concerns that developing economies
such as China may not be able to escape a slowdown.
MSCI's index of Asian shares besides Japan <.MIAPJ0000PUS>
was down 4.5 percent at 0237 GMT.
CHINA CONCERNS
The president of China's sixth-largest bank told Reuters on
Monday that earnings at Chinese banks will probably be hit this
year by the snowballing U.S. subprime mortgage crisis and
Beijing's moves to cool the economy [].
"News like this suggests that damage may be spreading in
developing markets including China, and this is worsening the
overall sentiment in financial markets," said Toshiyuki Suzuki, a
New York-based strategist at Mitsubishi UFJ Bank.
"It appears that these markets too will not be able to escape
the impact of the wave of worsening international economies."
Blue-chips were battered, with Sony down 5.1 percent at 5,210
yen, Toyota sliding 5.5 percent to 4,970 yen and Honda down 5.7
percent at 2,925 yen.
Banks slid as well, with Mizuho Financial Group <8411.T>
slipping 5.4 percent to 439,000 yen and Sumitomo Mitsui Financial
Group <8316.T> down 4.1 percent at 728,000 yen.
Mobile phone carriers NTT DoCoMo Inc <9437.T>, KDDI Corp
<9433.T> and Softbank Corp <9984.T> dropped after Softbank -- the
smallest of the three mobile carriers -- announced a plan to
eliminate its 980 yen monthly basic fee for three years to
students. []
KDDI, the second-biggest drag on the Nikkei in terms of index
weight, fell 5.1 percent to 739,000 yen.
Trade was active, with 1.2 billion shares changing hands on
the Tokyo Stock Exchange's first section, compared with last
week's morning average of 1.14 billion.
Declining shares beat advancing ones by more than 14 to 1.
(Additional reporting by David Dolan; Editing by Mike Miller)
