Japan stocks slip on credit worries, banks down

Tokyo, Oct 16: Japanese stocks slipped on Tuesday, with the Nikkei average down by 0.9 percent as shares tracked Wall Street falls fed by renewed credit concerns, with bank stocks such as Mitsubishi UFJ Financial Group hit hard.

Nomura Holdings, Japan's largest brokerage, said on Monday it would pull out of the U.S. residential mortgage-backed securities market and cut a quarter of its U.S. workforce, pushing it to a big quarterly loss and renewing concern in Japan about the impact of the subprime mortgage issue.

But market participants said the biggest impact came from Wall Street and comments by Citigroup's chief financial officer, who said U.S. consumer credit will likely weaken this quarter after mortgage delinquencies accelerated -- statements that weighed broadly on U.S. financial stocks.

''There's definitely a bit of impact from the Nomura announcement, but that's limited since they've basically taken care of the situation and losses are unlikely to rise further,'' said Norihiro Fujito, general manager of the investment research and information division at Mitsubishi UFJ Securities.

''But the Citi comments have raised the spectre of continuing credit problems at a point when the market had basically decided the worst was behind us already, and that's affecting financial shares here in Japan.'' Record high crude oil prices also chilled Wall Street sentiment, and while this boosted shares in energy firms such as INPEX Holdings Inc and Nippon Oil Corp, extended high prices could have a negative impact on company results.

At 0053 GMT the benchmark Nikkei average was down by 143.55 points at 17,214.60 The broader TOPIX index slid by 1.1 percent to 1,639.11.

Trade was relatively thin, with many market players adopting a wait-and-see stance ahead of a raft of Japanese company results due out next week. The renewed credit worries were also likely to be inhibiting buying.

Shares in Nomura Holdings pared earlier losses but still were down by 2.4 percent at 2,025 yen.

But other financial firms fared worse, with Mitsubishi UFJ down by 3.82 percent at 1,084 yen and Sumitomo Mitsui Financial Group down by 3.04 percent at 893,000 yen. Mizuho Financial slipped by 2.86 percent to 647,000 yen.

U.S. crude jumped nearly 3 percent to a record high above $86 a barrel on Monday as fresh tensions in the Middle East added to worries of a supply crunch when cold weather stokes up heating demand this winter.

INPEX Holdings was up 3.9 percent at 1.32 million yen after hitting an all-time high of 1.33 million yen at one point. Nippon Oil Corp rose 2.3 percent to 1,109 yen and Nippon Mining Holdings Inc climbed 2.4 percent to 1,226 yen.

REUTERS>