*Nikkei down 1.1 pct after U.S. Senate passes bailout bill
*Economic fears weigh
*Carmakers slip on worries about U.S. economy
*Investors turn defensive, drugmakers rise
(Adds stocks, details)
By Elaine Lies
TOKYO, Oct 2 (Reuters) - Japan's Nikkei stock average slipped
1.1 percent on Thursday despite passage of the financial bailout
bill by the U.S. Senate, with worries about its fate in the U.S.
House and concern about the global economy overpowering relief.
Honda Motor Corp <7267.T> and Toyota Motor Co <7203.T> slid
on growing gloom over the U.S. economy, with high tech shares
also taking a beating. Shares of Komatsu Inc <6301.T>, the
world's second-largest maker of earth-moving equipment, tumbled
nearly 10 percent.
The Senate voted 74-25 for the historic $700 billion bailout
of the U.S. financial industry, with the results coming out late
in morning trade.
But the market reaction was negative.
"Basically, there's still a lot of distrust of this bill in
the House, so it's hard to know what will happen there," said
Katsuhiko Kodama, senior strategist at Toyo Securities.
"Even more, if you look at recent indicators for the U.S. and
Japan the economy is clearly bad, and investor attention is
shifting to the economy. You can't expect a rebound just on the
bill passing the Senate."
U.S. factory activity shrank in September to its lowest since
the 2001 recession, and private employers shed jobs for the third
time in four months. []
On Wednesday, the Bank of Japan's quarterly tankan survey
showed sentiment among big manufacturers turning negative for the
first time in five years.
Investors were also awaiting developments in Europe -- where
France and Germany clashed over the idea of a U.S.-style
financial rescue fund for Europe -- and Wall Street's response to
the results of the Senate vote, some market players said.
"In the end, the main focus is on economic problems, and
Europe appears to be in terrible shape," said Nagayuki Yamagishi,
a strategist at Mitsubishi UFJ Securities. "It's impossible to
avoid the sense of an economic slowdown."
The benchmark Nikkei shed 125.61 points to 11,242.65, while
the broader Topix was down 1.7 percent at 1,082.72.
CARMAKERS BATTERED, HIGH-TECH HIT
Honda and Toyota both slid, battered by increasing pessimism
about the U.S. economy and poor auto sales there, with Honda
shedding 4.5 percent to become the biggest drag on the Nikkei 225
by volume weight.
Toyota lost 3.8 percent to 4,290 yen.
High-tech shares such as Advantest <6857.T> and TDK Corp
<6762.T>, a leading maker of magnetic heads, lost ground after
their U.S. peers -- including Apple Inc <AAPL.O>, which fell 4
percent -- slid. The Philadelphia Semiconductor Index <.SOXX> was
down 1.2 percent.
TDK shed 4.3 percent to 5,080 yen and Advantest was down 4.6
percent to 2,065 yen.
Defensive shares helped brake the market's fall, though, with
drugmakers extending recent gains. Takeda Pharmaceuticals Co Ltd
<4502.T> rose 3.3 percent to 5,700 yen and Astellas Pharma Inc
<4503.T> was up 2.2 percent at 4,680 yen.
Fujitsu Ltd <6702.T> surged after a company source said the
firm is in talks with Western Digital Corp <WDC.N> and others on
the sale of its money-losing hard drive business, though Fujitsu
denied that it was now approaching an agreement or arranging a
sale. []
It ended morning trade up 4.5 percent at 627 yen.
Trade picked up on the Tokyo exchange's first section, with
950 million shares changing hands, compared with last week's
morning average of 854 million.
Declining stocks outpaced advancing ones by nearly 4 to 1.
(Reporting by Elaine Lies)
