*Nikkei falls 1.3 percent, led by exporters on strong yen
*Banks drop sharply after U.S. peers hit by credit concerns
*Trade volume thin
(Adds stocks and comments)
By Taiga Uranaka
TOKYO, Aug 26 (Reuters) - The Nikkei average fell 1.3 percent
on Tuesday, led lower by exporters such as Canon Inc <7751.T> on
a stronger yen and a rebound in oil, while bank stocks succumbed
once again to worries about the health of the U.S. financial
sector.
These factors pushed down the market to erase most of the
previous day's gains within minutes of the opening.
Credit problems are brewing at home as well, with builder
Asahi Homes Co <1913.Q> plunging after it said its majority
shareholder had filed for court protection.
"Concerns about credit risks both in the United States and
Japan are still strong. There are also worries about the global
economic outlook," said Yukio Takahashi, a market analyst at
Shinko Securities.
The benchmark Nikkei <> ended the morning down 169.14
points at 12,709.52. It had gained 1.7 percent on Monday.
The broader Topix <> lost 1.7 percent to 1,218.04.
Market participants said domestic factors that could move the
market were few and far between, and there was not much hope that
sentiment would get a significant lift from an economic package
the government aims to compile this month. []
"Many in the market do not seem to be holding high hopes for
the package, though it may lead to rallies in some specific
sectors or stocks if it touches on topics such as solar cell
power generation," said Noritsugu Hirakawa, strategist at Okasan
Securities.
BANKS FALL
Banks shares were among the hardest hit after making sharp
gains on Monday on hopes that U.S. investment bank Lehman
Brothers <LEH.N> would attract a major investor.
But a South Korean regulator voiced concern about state-run
Korea Development Bank's interest in acquiring a global bank,
quashing expectations that it could emerge as a white knight.
No.1 lender Mitsubishi UFJ Financial Group <8306.T> fell 3.1
percent to 805 yen, while No.2 Mizuho Financial Group <8411.T>
dropped 2.8 percent to 449,000 yen.
Asahi Homes, which trades on the Jasdaq startup market,
plunged 24.1 percent to 44 yen after it said its majority
shareholder had collapsed with 62 billion yen ($567 million) in
debt, hit by higher costs and a housing slump in Japan.
Digital camera maker Canon shed 2 percent to 5,010 yen and
industrial robot maker Fanuc Ltd <6954.T> lost 2.1 percent to
7,990 yen, both among the biggest drags on the Nikkei.
Bucking the trend, Yamaha Corp <7951.T> jumped 6.6 percent to
1,920 yen after a newspaper reported the music instrument maker
is considering a management buyout. The firm denied the report.
Nippon Sheet Glass Co Ltd <5202.T> rose 5.1 percent to 552
yen after Credit Suisse revised up its forecasts for the
glassmaker on a lower crude oil price assumption.
Trade was thin, with only some 636 million shares traded on
the Tokyo Stock exchange's first section compared with last
week's morning average of 784 million.
Declining shares outpaced advancing ones by more than 7 to
one.
(Editing by Edwina Gibbs)
