Nikkei slides as exporters drop on U.S. concerns

TOKYO, July 10 (Reuters) The Nikkei average slid 1.40 percent on Monday, hit by losses in exporters such as Toyota Motor Corp., after U.S. employment data raised concerns about an economic slowdown and inflation in a key market for Japanese goods.

The stronger yen added to the sell-off. The Japanese currency was near a one-month high against the dollar, increasing worries that exporters would see lower profits from their foreign sales.

''There's concern about inflation in the United States,'' said Katsuhiko Kodama, senior strategist at Toyo Securities.

''It's unclear what will happen (there), and adding to that lack of clarity we've got the gains in the yen.... That makes buying difficult,'' he said.

''Right now it's a case of trying to figure out where the selling will stop.'' The Nikkei was down 215.03 points at 15,092.58 as of 0050 GMT. The broader TOPIX index was down 1.37 percent at 1,551.62.

The U.S. Labor Department said on Friday 121,000 nonfarm payroll jobs were created in June, well below economists' expectations of 185,000 jobs. The result showed a rise in average hourly earnings, raising concern about inflation.

The data also helped send the yen higher. The currency was fetching 113.91 to the dollar, after rising to a one-month high of 113.79 on Friday.

Toyota fell 1.2 percent to 5,910 yen.

Entertainment and electronics conglomerate Sony Corp. slid 1.6 percent to 4,910 yen.

Internet and telecoms firm Softbank Corp. was down 4.6 percent at 2,195 yen, extending losses from its drop of nearly 11 percent in the previous session.

Brokerage Merrill Lynch on Friday started coverage of the stock with a ''sell'' rating, saying its prospects in the mobile business were difficult to judge.

REUTERS PDS RAI0701