Japan stocks tumble amid global sell-off, Nikko down

TOKYO, Feb 28 (Reuters) Tokyo's broad TOPIX index booked its biggest one-day fall in eight months on Wednesday, dropping 3.23 percent after a global market sell-off prompted investors to unload stocks from Nippon Steel Corp. to Toyota Motor Corp.

Shares of Nikko Cordial Corp. plunged 14.9 percent following a newspaper report that the brokerage was likely to be delisted due to an accounting scandal.

The losses prompted the Tokyo stock exchange to limit arbitrage trade and briefly suspend trade of TOPIX futures.

''This really hurts,'' said Tatsutyuki Kawasaki, director of equities trading at Kaneyama Securities.

''The real question is whether New York will be able to rebound tonight. If it doesn't, investors are going to start looking for the reasons behind all this selling.'' The TOPIX shed 3.23 percent, or 58.59 points, to 1,752.74. The TOPIX' fall was the biggest one-day percentage drop since June 2006.

The Nikkei lost 2.85 percent to 17,604.12, also its largest daily fall in eight months.

Junichi Misawa, senior fund manager at STB Asset Management, said given this fiscal year's expected earnings growth, the Nikkei should be at around 17,500 and the market may be due for a correction.

''The market got a wake-up call,'' he said.

Even after the sell-off, the TOPIX is still up 4.3 percent so far this year, outperforming the FTSEurofirst 300 of European shares, which has risen 1.5 percent, and Standard&Poor's 500 Index, which is down 1.4 percent.

Trade on the Tokyo Stock Exchange's first section hit a record in terms of value on Wednesday. A total of 4.83 trillion yen worth of shares changed hands on the exchange's first section, eclipsing the previous record of 4.65 trillion yen set in December 2005.

REUTERS CS ND1316