TOKYO, Nov 16 (Reuters) Japan's Nikkei share average fell 1.6 percent on Friday as Mitsubishi Estate Co and other property stocks declined on weak condominium sales data, while financial and exporters dropped amid credit woes.
Shares of brokerage firms such as Nomura Holdings sank on a news report that a government tax committee has proposed letting temporary tax breaks on capital gains and dividend income expire.
Investors meanwhile flocked to defensive stocks, namely food shares such as Asahi Breweries, making the food subindex the only sector to advance.
The dollar fell against the yen, a sign that concern about a slowdown of the U.S. economy is growing, and falls in Asian stocks also kept the Tokyo market in check.
Kirby Daley, a strategist at Fimat, said that on top of global uncertainties stemming from the U.S. mortgage turmoil, Japan has its own reasons for failing to allure foreign investors, who have been the engine for the Tokyo market's rises.
''We have at play continuing inaction of the government to address long-term issues facing structural issues in the economy, pension reforms, tax forms, deregulation. We've seen a resurgence of bureaucracy,'' said Daley. ''Foreign investors look at all of this and say, 'why buy?''' The Nikkei average declined 241.69 points to end at 15,154.61.
The benchmark now has fallen 17 percent from this year's high of 18,300.39 marked in February. So far this year, the Nikkei is down 12 percent.
The broader TOPIX index lost 1.8 percent to 1,471.67.
Trade volume was moderate with 1.83 billion shares changing hands, compared with a daily average volume of 1.98 billion shares in October. Decliners beat advancers by a ratio of about 6 to 1.
PROPERTY DOWN Property stocks came under pressure after an industry research group said on Thursday that condominium sales in the greater Tokyo area fell 9.1 percent in October from a year ago. Pressure also mounted on worries about the weakening overall housing market after tighter construction rules were introduced earlier this year.
Japan's second largest property firm Mitsubishi Estate Co Ltd was down 5 percent at 2,840 yen and Mitsui Fudosan fell 4.4 percent to 2,620 yen.
Brokerage firms rang up losses on worries that the proposed expiration of tax breaks on capital and dividend gains would curb investors' appetite for stocks. Nomura lost 4.8 percent to 1,829 yen and Daiwa Securities Group fell 2.8 percent to 974 yen.
The tax breaks are set to expire by the end of fiscal year 2008 and it has been a contentious issue for lawmakers and bureaucrats.
Bank shares continued to fall victim to the subprime problems.
Japan's second-largest banking group Mizuho Financial Group declined 2.6 percent to 532,000 yen and No.1 Mitsubishi UFJ Financial Group slipped 2.9 percent to 934 yen.
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