Tokyo stocks fell on Wednesday as investors were gripped by fears over a prolonged credit crunch stemming from the US subprime mortgage market meltdown.
The 225-issue Nikkei Stock Average lost 73.39 points, or 0.58 percent, from Tuesday to 12,681.17, Japanese news agency Kyodo reported.
The broader Topix index of all First Section issues on the Tokyo Stock Exchange was down 11.19 points, or 0.89 percent, to 1,241.93.
Mining and trading house issues were among the main losers, while forestry and fishery, pulp and paper, and air transport stocks led gainers.
The Tokyo market started weak but selling was soon offset by bargain-hunting, brokers said. Tokyo stocks on Tuesday closed sharply lower, sending the key Nikkei index to a three-month closing low.
But the advance tapered off as uncertainty in the US financial sector, reinforced by the recent US action to rescue troubled US mortgage finance giants Fannie Mae and Freddie Mac, continued to weigh on investor sentiment, brokers said.
According to Kyodo, The Tokyo market was also dragged down by concerns not only about the economic outlook of the United States but of Japan as well.
The Bank of Japan Governor Masaaki Shirakawa said on Tuesday that the Japanese economy is further slowing and the central bank downgraded its forecast for the country's economic growth for the current fiscal year amid inflation concerns.
In Hong Kong meanwhile trade was down slightly on Wednesday, as investors remained cautious about the financial situation in the US.
The benchmark Heng Seng Index lost 186.03 points, or 0.88 percent, to open at 20,988.74 points.
The financial blue chips were mixed in the morning market.
HSBC Holdings rose 0.62 percent at 113.70 Hong Kong dollars (14.583 US dollars), whilst the Bank of China (Hong Kong) dropped 0.42 percent at 18.86 Hong Kong dollars (2.419 US dollars).