The Nikkei stock average fell 2.8 per cent today, with exporters such as Canon hit by a stronger yen and further evidence the United States may be in recession, while KDDI Corp tumbled after cutting its profit forecast.
US stocks slumped on Friday after surprisingly weak earnings from General Electric Co and data showing consumer sentiment at a 26-year low fed fears the economy is in recession.
The benchmark Nikkei average finished the morning down 373.93 points at 12,949.80. It finished on Friday up 2.9 per cent, ending a three-day losing streak, and gained 0.2 per cent for the week.
The broader TOPIX index declined 2.5 per cent or 31.68 points to 1,246.94. The dollar rose as high as 101.97 yen earlier, up from around 101.00 yen in late New York trade, but later trimmed its gains to stand at 101.17 yen.
Market analysts said nothing substantial came out of the Group of Seven finance heads meeting at the weekend so this was having very little impact on the market.
The world finance leaders concluded their meeting by announcing a new plan to clean up banks and fresh resolve to rein in foreign exchange markets, but little hope that the credit crisis was nearing an end.
GE posted an unexpected 6 per cent drop in first-quarter profit on Friday, the biggest shock yet to a US industrial bellwether from the credit crisis and the latest sign the US economy may be in a recession.
One bright spot was Takashimaya Co Ltd after the department store operator said its operating profit rose 11.3 per cent to 37.7 billion yen ($372 million) for the year just ended, boosted by increased sales at a revamped store in Tokyo and the solid performance of its Singapore operation.
Takashimaya climbed 3.8 per cent to 1,225 yen.