* Exporters hit by U.S. economy worry after dismal GDP
* Banks slip in wake of U.S. peer losses, Citi fear weighs
* Sony gains after reshuffle, ratings upgrade
(Adds stocks, details)
By Elaine Lies
TOKYO, March 2 (Reuters) - Japan's Nikkei stock average slid
3.2 percent on Monday, with Mitsubishi UFJ Financial Group
<8306.T> and other banks sinking on fears about their U.S. peers,
while exporters fell on worry about the U.S. economy.
But Sony Corp <6758.T> bucked the trend by rising after the
company said on Friday that CEO Howard Stringer would double up
as president and directly oversee the company's ailing
electronics division []
Banks skidded, with the banking index <.IBNKS.T> down 3.8
percent, after the U.S. government said it would take a large
stake in Citigroup Inc <C.N>'s common shares, fanning fears it
will increase its role in other major banks. []
"Wall Street basically fell on worries over what may be next
after Citigroup, and this fear is hitting Tokyo as well," said
Masayoshi Okamoto, chief of dealing at Jujiya Securities.
"As the U.S. economy gets worse, Japan and other Asian
economies will be hit one to two times harder since manufacturers
will inevitably suffer," Okamoto said.
The U.S. economy shrank at an annual rate of 6.2 percent last
quarter, data released on Friday showed -- the deepest slide
since 1982 and outpacing analyst forecasts for a 5.4 percent
contraction. []
Consumer spending dropped at a 4.2 percent rate, the biggest
fall since the second quarter of 1980, which market players said
could seriously dent exporters and Japan's export-heavy Nikkei.
The benchmark Nikkei <> shed 242.46 points to 7,325.96.
Last week it hit 7,155.16, within sight of a 26-year low just
below 7,000.
The broader Topix <> lost 2.5 percent to 738.11.
"The macroeconomic environment remains pretty grim, but
expectations for public pension fund buying on dips and hopes for
government stock-buying steps are likely to limit falls," said
Hiroichi Nishi, general manager at the equity division of Nikko
Cordial Securities.
Japan's government last week said it was looking into ways to
support the stock market, which may include setting up a
stock-buying agency the way it did in the mid-1960s, but market
players noted that nothing new has emerged since then, raising
scepticism about what, if anything, will eventually emerge.
BANKS BATTERED
U.S. bank shares suffered after Washington said on Friday it
would boost its equity stake in Citigroup to as much as 36
percent. [] In U.S. trading, Citigroup shares
slumped 39 percent and touched their lowest in more than 18
years. The S&P financial index <.GSPF> sank 8.1 percent.
Embattled insurer American International Group Inc <AIG.N>
approved a new rescue package on Sunday that includes another $30
billion equity commitment from the U.S. government.
[]
Inevitably, Japanese banks sank in response.
Mitsubishi UFJ Financial Group, Japan's top lender, lost 5.1
percent to 431 yen and No. 3 bank Sumitomo Mitsui Financial Group
<8316.T> fell 4.4 percent to 3,030 yen. Mizuho Financial Group
<8411.T> dropped 4.3 percent to 180 yen.
Canon Inc <7751.T> fell 4.5 percent to 2,425 yen and Toyota
Motor Corp <7203.T> lost 2.5 percent to 3,100 yen. Panasonic Corp
<6752.T> shed 2.5 percent to 1,125 yen.
Though the dollar flirted with the day's lows, dipping to
just under 97 yen in Tokyo trade, it was fetching 97.88 yen by
midday -- a move likely to give exporters some relief. <JPY=>
Investors prefer a weaker yen because it boosts exporter
profits when repatriated.
"Investors remain quite nervous about whether the recent weak
yen trend will continue or not," said Jujiya's Okamoto.
Sony bucked the market's fall, rising 1.4 percent to 1,691
yen after opening down 3.5 percent.
The shake-up consolidates Stringer's control of the sprawling
conglomerate and may make it easier to unite factions that
analysts say have hindered its ability to develop hit products.
Nikko Citigroup raised its rating on Sony to "buy/high risk"
from "hold/high risk", citing expectations for accelerated
restructuring after the management shake-up, and it raised its
target price for Sony shares to 2,200 yen from 2,100 yen.
[]
Trade was light on the Tokyo exchange's first section, with
777 million shares changing hands, compared with last week's
morning average of 967 million.
Declining shares outpaced advancing ones by more than 4 to 1.
(Reporting by Elaine Lies; Editing by Chris Gallagher)
