Nikkei falls 3 percent as exporters hammered

TOKYO, Mar 5 (Reuters) The Nikkei share average touched a new low for 2007 on Monday, sliding more than 3 percent as investors continued to hammer exporters such as Toyota Motor Corp. and Canon Inc. following the yen's rise.

The sell-off pushed the benchmark share average below the psychologically important 17,000 level for the first time in nearly two months and left investors wondering when stocks will rebound.

''If New York continues to slide and the yen continues to strengthen at this pace, there is no bottom in sight for Japan,'' said Kirby Daley, a strategist at brokerage Fimat.

The Nikkei was down 2.9 percent, or 500.41 points, at 16,717.52 as of 0507 GMT, after earlier hitting its lowest point since December.

The broader TOPIX index was down 2.83 percent at 1,672.92.

The yen touched 115.37 to the dollar on Monday, its highest in three months. A stronger yen is a minus for exporters as it eats into profits when earnings from abroad are brought home.

Toyota fell 3 percent to 7,480 yen. The world's most profitable auto maker makes nearly three-quarters of its sales outside of Japan.

''The real worry is the currency,'' said Masayoshi Okamoto, head of dealing at Jujiya Securities.

''Toyota has assumed an exchange rate of 115 yen to the dollar for the fourth quarter. While we're already close to that, the thing is that investors were buying Toyota on the assumption that the exchange level would be around 120 yen,'' Okamoto said.

Office equipment maker Canon, which makes nearly 80 percent of it sales overseas, dropped 1.9 percent to 6,140 yen.

Shares of SMC Corp. fell 3.8 percent to 15,020 yen. The maker of pneumatic equipment said on Friday a state-backed body would sell about 3 million worth of its shares in a secondary offering later this month.

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