Tokyo shares fall more than 3 pct on yen, Wall St

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TOKYO, Nov 12 (Reuters) Tokyo stocks dropped more than 3 percent on Monday to hit over 15-month lows, as Honda Motor Co Ltd and other Japanese exporters fell following the yen's sharp rise against the dollar and losses on Wall Street.

The dollar extended losses and fell to a fresh 18-month low of 109.85 yen, putting further pressure on exporters. A broad sell-off also prompted investors to sell domestic stocks as well as all sectors losing ground.

''I'm not doing anything, waiting for the storm to pass,'' said Masayoshi Okamoto, head of dealing at Jujiya Securities.

''The 15,000 level may be the support for the time being but that could change depending on dollar/yen moves and U.S. stocks.'' The Nikkei declined 3.28 percent to 15,072.60 as of 0444 GMT, after earlier breaking below 15,000, the lowest since July 27, 2006. For the year, the Nikkei benchmark lost 12.5 percent.

The broader TOPIX shed 3.02 percent to 1,449.29, the lowest since June 2006.

Tsuyoshi Segawa, equity strategist at Shinko Securities, said sentiment has deteriorated on speculation that some hedge funds may be ready to sell.

''In addition to the high yen, there are expectations in the market that hedge funds, likely to face redemptions from their clients ahead of the end of December, will likely sell more of their holdings,'' he said.

Honda gave up 4.9 percent to 3,710 yen. Japan's second-biggest automaker has forecast the dollar to average 113 yen in the second half. The company said each one-yen gain against the dollar trims its operating profit by 2 billion yen.

Industry leader Toyota Motor Corp, which assumed a dollar/yen rate of 110 yen for the second-half of their fiscal year to March, lost 2.1 percent to 6,020 yen.

Japan's three largest banks rang up losses. Mizuho Financial Group Inc dropped 4.1 percent at 509,000 yen, extending its lowing streak into a fourth session. The bank lost 5.7 percent on Friday after the Nikkei business daily reported its unlisted brokerage arm may post a subprime-related loss of more than 100 billion yen (6 million).

Mitsubishi UFJ Financial Group also fell 2.7 percent to 895 yen and Sumitomo Mitsui Financial Group shed 4.1 percent to 719,000 yen.

Japanese banks' performance was in stark contrast to their U.S. peers such as Citigroup, which gained even after a fresh bout of credit loss revelations from some big banks, including Wachovia and Morgan Stanley.

A few bright spots included Nippon Telegraph and Telephone Corp (NTT), Japan's largest telecoms company. It rose 1.4 percent to 501,000 yen after it said on Friday it would buy back up to 100 billion yen worth of its own shares.

REUTERS RJ KP1104

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