Japan's Nikkei share average fell 4.3 percent on Thursday to a three-week low, with Canon Inc and other exporters battered by a stronger yen and fears that the financial crisis will hurt corporate earnings.
Concern that the deteriorating global economy is biting into Japan's economy intensified after the nation's exports logged their biggest annual decline in seven years in October, pushing the trade balance into deficit.
Investors were also concerned about demand from the United States after consumer prices in the world's biggest economy fell at the sharpest rate on record in October. "This will have a huge negative impact on the U.S. economy and, as a result, on the global economy," said Masayoshi Okamoto, head of dealing at Jujiya Securities.
The benchmark Nikkei dropped 357.59 points to 7,915.63, sliding below 8,000 for the first time since late October and hitting a three-week intraday low of 7,890.56 early on.
The broader TOPIX index slid 3.8 percent to 795.88 after hitting a three-week intraday low at 794.44. Japanese shares were also hurt after U.S. stocks hit a 5-½ year low as investors braced for a lengthy economic downturn and automotive executives predicted a far-reaching calamity without a government lifeline.
The market got some support, though, as players hunted for bargains after an initial sell-off, traders said.
"The market found a temporary floor as buying from pension funds emerged," said Kazuki Miyazawa, market analyst at Daiwa Securities SMBC.
Trade fell slightly, with some 905 million shares changing hands on the exchange's first section compared with last week's morning average of 945 million. Declining shares outnumbered advancing ones by more than 5 to 1.
The yen held gains made on Wednesday, underpinned by investor risk aversion, hitting shares of key exporters such as Cannon, which also makes office products. Its shares slid 3.7 percent to 2,700 yen.
Among high-tech exporters, Tokyo Electron Ltd, Japan's top semiconductor maker, plunged 8.5 percent to 2,520 yen after data showing a 68 percent slide in orders for Japanese equipment used to make semiconductors, reflecting a glut of oversupply in the sector.
Toyota Motor Corp slipped 2.6 percent to 2,970 yen after the world's largest automaker said on Wednesday it would stop all of its North American factories for two days next month.
Big banks suffered as the financial crisis shows little sign of ending, with Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group both sinking to five-year lows.
Citigroup Inc faced a crisis of confidence on Wednesday as investors questioned the survival prospects of the U.S. bank giant, and its shares tumbled 23 percent to a 13-year low.
