(Adds stocks, comments)
By Taiga Uranaka
TOKYO, June 3 (Reuters) - Japan's Nikkei average fell 1.5
percent on Tuesday, hurt by overnight losses on Wall Street and
with exporters such as Honda Motor Co Ltd <7267.T> hit by a
stronger yen.
Financial shares such as top lender Mitsubishi UFJ Financial
Group <8306.T> fell after their U.S. peers tumbled on a credit
ratings agency downgrade, raising new fears over the impact of
the credit crunch.
"Forgotten problems were brought up again," said Fumiyuki
Nakanishi, a group manager in the investment research department
at SMBC Friend Securities.
The benchmark Nikkei <> ended the morning down 218.35
points at 14,221.79. The broader Topix index <> lost 1.2
percent to 1,408.33.
Honda fell 3.9 percent to 3,470 yen and high-tech device
maker Kyocera Corp <6971.T> fell 2 percent to 9,920 yen, making
them the biggest drags on the Nikkei.
Mitsubishi UFJ fell 1.2 percent to 1,116 yen following a
tumble in U.S. financial stocks after Standard & Poor's
downgraded debt ratings of three big securities companies.
Japanese bank stocks had booked hefty gains on Monday on
expectations for earnings growth, and market participants said
their fall was small compared with that of their U.S. peers.
"Japanese bank stocks showed resilience today. They used to
suffer big falls when U.S. financials were sold," said Hiroaki
Osakabe, a fund manager of Chibagin Asset Management.
"That has changed since May. A view has been spreading that
Japanese banks are different from overseas rivals."
Mizuho Financial Group <8411.T>, the nation's second-largest
bank, edged down 0.2 percent to 590,000 yen by midday after
managing to turn positive at times after losing as much as 2
percent immediately after the opening.
ENVIRONMENT STOCKS
In contrast with the broad sell-off, some stocks of firms in
the fields of nuclear reactors and electric cars rose sharply.
Japan Steel Works Ltd <5631.T> rose 2.4 percent to 2,355 yen,
up for the sixth straight day for cumulative gains of 17 percent.
The maker of nuclear reactor components and turbine-generator
shafts has become a popular stock among investors who see a
future in nuclear reactors for electricity generation amid
growing concerns about global warming.
Nuclear power generation system makers Mitsubishi Heavy
Industries <7011.T> and Hitachi Ltd <6501.T> both rose 0.9
percent. Their rival Toshiba Corp <6502.T> edged up 0.3 percent.
Battery makers extended strong gains after the Nikkei
business daily reported on Monday that Japan Post is planning to
switch its entire fleet of delivery vehicles to electric cars.
[]
GS Yuasa Corp <6674.T> rose 4 percent to 443 yen and Furukawa
Battery Co Ltd <6937.T> jumped 10.9 percent to 787 yen.
"Other stocks were stalling on concerns about an economic
slowdown, but the environmental theme is straightforward and
atracts investors," said Chibagin Asset Management's Osakabe.
On the TSE's Mothers startup market, Skymark Airlines Inc
<9204.T> plunged 8.5 percent to 195 yen after the carrier
reported to the authorities that it would cancel 168 flights in
June due to a shortage of pilots.
Trade picked up slightly, with 999 million shares changing
hands on the first section of the Tokyo stock market compared to
last week's morning average of 857 million.
Decliners outnumbered advancers by nearly 5 to 1.
(Editing by Michael Watson)
