*Nikkei down 1.5 percent, led down by bank shares
*Banks hit by growing U.S. credit worries
*Hokkaido Elec Power falls on its loss forecast
(Adds stocks and comments)
By Taiga Uranaka
TOKYO, July 15 (Reuters) - The Nikkei share average fell 1.5
percent on Tuesday as financials such as Japan's top lender
Mitsubishi UFJ Financial Group <8306.T> tumbled on worries about
the health of the U.S. banking sector.
Hokkaido Electric Power Co <9509.T> also slid after the
regional utility said it expected to post losses this business
year hit by surging fuel prices and outage work at a nuclear
power plant. []
U.S. financial shares were hit on Monday amid growing alarm
about regional banks following the collapse of mortage lender
IndyMac Bancorp Inc <IMB.N>. A U.S. government pledge of support
to stabilise the nation's top mortgage agencies Fannie Mae
<FNM.N> and Freddie Mac <FRE.N> failed to curb worries.
"The U.S. is suffering a compound fracture" said Hiroyuki
Nakai, chief strategist at Tokai Tokyo Research Center.
"The Fannie Mae and Freddie Mac problem could come to an end
if the government were to eventually take over, but inflation and
the downturn in the economy remain," he said.
The benchmark Nikkei <> ended the morning down 193.20
points at 12,816.96. The broader Topix <> lost 1.6 percent
to 1,260.26.
Domestic concerns were also weighing on the market.
Later in the day, the central bank is expected to keep
interest rates on hold and warn that Japan's growth will likely
be slower than it had anticipated a few months ago due to
skyrocketing oil and raw materials prices. []
"Japan has been widely perceived to have relatively stable
(consumer) prices, but the Bank of Japan might raise its
inflation outlook and sharply downgrade its economic overview,"
said Masayoshi Okamoto, head of dealing at Jujiya Securities.
Among bank shares, Mitsubishi UFJ slid 4 percent at 939 yen
and No. 2 Mizuho Financial Group <8411.T> dropped 3.5 percent to
519,000 yen.
The Nikkei business daily said Japan's top three banks had
roughly 4.7 trillion yen ($44.3 billion) in debt securities
issued by U.S. top mortgage finance agencies as of the end of
March. []
"There is uncertainty over the entire sector," said Naoteru
Teraoka, general manager of investment management division at
Chuo Mitsui Asset Management.
UTILITIES DOWN
Hokkaido Electric Power dropped 4.6 percent to 2,080 yen
after it said it expected to post an operating loss of 38 billion
yen compared with its previous forecast for a profit of 21
billion yen.
Other utilities also fell, with Tokyo Electric Power Co
<9501.T> down 1.3 percent at 2,710 yen and Kansai Electric Power
Co <9503.T> shedding 2.4 percent to 2,400 yen.
Among gainers, Matsui Securities Co <8628.T> jumped 7.3
percent to 662 yen after the publisher of the Nikkei share
average said it would include the online broker in the index on
July 28.
Square Enix Co <9684.T> gained 4.2 percent to 3,220 yen after
Microsoft Corp <MSFT.O> said the Japanese game software publisher
would launch the popular "Final Fantasy XIII" game for its Xbox
360 video game console in addition to Sony Corp's <6758.T><SNE.N>
PlayStation3. []
Trade slowed on the Tokyo exchange's first section, with 859
million shares changing hands, compared with last week's morning
average of 926 million.
Declining stocks outpaced advancing ones by a ratio of nearly
2 to 1.
