Tokyo stocks tumble, exporters hit by US slide, strong yen

TOKYO, Aug 29 (Reuters) Japanese stocks tumbled more than 2 percent on Wednesday as rekindled worries about the economy and a credit squeeze that saw sharp falls on Wall Street triggered selling across the board in Tokyo, with a stronger yen especially hurting Canon Inc and other exporters.

Financial stocks also slid after their U.S. counterparts tumbled on a Merrill Lynch warning that ailing credit markets will hurt bank profits.

''Japanese stocks tend to skid more than U.S. stocks after a fall in the U.S. market as investors buy the yen as a response.

It comes as a 'double punch,''' said Tsuyoshi Nomaguchi, a strategist of Japanese equity research at Daiwa Securities' investment advisory department.

''I cannot say the Nikkei won't test the 15,200 level, which was the latest year-low.'' The benchmark Nikkei average was down 2.3 percent or 380.63 points at 15,906.86 as of 0051 GMT.

The broader TOPIX index lost 2.6 percent or 41.29 points to 1,543.31 after sliding 3 percent earlier.

The dollar was trading around 114.00 yen after slipping to a low near 113.85 yen.

Nomaguchi said investors need to stay vigilant as U.S.

consumer sentiment shows a worsening outlook for the real economy there.

U.S. consumer sentiment took its sharpest plunge in nearly two years in August, and home prices swooned in the second quarter.

Shares in Canon tumbled 3.7 percent to 6,300 yen and Sony Corp fell 3.2 percent at 5,210 yen. Shares of Honda Motor Co Ltd lost 3.2 percent to 3,660 yen.

Financial stocks were also hit. Shares of Mizuho Financial Group were down 3.5 percent to 689,000 and Nomura Holdings dropped 3.5 percent to 1,949 yen.

Reuters RKM VP0650