Japan shares dive after big Wall Street losses

Japan shares dive after steep losses on Wall Street amid new worries about US financial sector

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The benchmark Nikkei 225 index sank 300.40 points, or 2.28 percent, to 12,865.05. The broader Topix index slid 2.23 percent to 1,235.54.

The losses came after a similar rout in the U.S. on Monday. The Dow Jones industrial average shed more than 175 points after Fannie Mae and Freddie Mac fell to their lowest levels in nearly 20 years on concerns that the government might need to bail out the mortgage financiers.

"People are worried again. It seemed like the subprime problems in the U.S. were mostly behind us," said Hiroichi Nishi, general manager at Nikko Cordial Securities.

He said the dollar's fall against the yen early in the day had also spurred selling, and many investors had little stomach for plunging back in ahead of major economic reports due out this week in the U.S., including housing starts and the Producer Price Index.

The dollar dipped as low as 109.64 yen compared with 110.24 yen Monday. Meanwhile, the dollar gained against the euro, which was trading at $1.4651 compared with $1.4719.

Stocks were down across the board, with major exporters taking a heavy beating.

Mazda Motor Corp. fell 4.48 percent to 554 yen, while Nintendo lost 3.27 percent to close at 48,750 yen. Canon Inc. slid 3.75 percent to 5,140 yen.

With concerns over the global financial picture spreading, the damage spread to banking, financial and insurance issues.

Sumitomo Mitsui Financial Group Inc. ended down 2.71 percent at 682,000 yen. Nomura Holdings Inc. lost 2.63 percent to 1,483 yen.

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