By Elaine Lies TOKYO (Reuters) - Japan's Nikkei average shed 1.4 percent on Wednesday after making record gains a day earlier, with worry about the global economy and company earnings weighing on the market along with a stronger yen. Shares of Elpida Memory (6665.T: Quote, Profile, Research, Stock Buzz) were overwhelmed with sell orders after the chipmaker said it would post a much bigger loss than expected, while shipping firms tumbled after a key freight index logged a big fall. Toyota Motor Co (7203.T: Quote, Profile, Research, Stock Buzz) and other automakers slid on the gloomy outlook for U.S. car sales. Mazda Motor (7261.T: Quote, Profile, Research, Stock Buzz) tumbled nearly 10 percent after a report that it has scrapped plans to build a second U.S. factory. "While the financial system crisis appears to be heading in a positive direction, the economy appears to be increasingly bad, and this is raising worries about company earnings," said Hiroaki Osakabe, a fund manager at Chibagin Asset Management. "We still don't know how much these might be hit." U.S. stocks fell on Tuesday on fears that the global economy may not avert recession, with technology and consumer companies hit hard although losses were offset slightly by better-than-expected results from Intel (INTC.O: Quote, Profile, Research, Stock Buzz) after the closing bell. .N The benchmark Nikkei .N225 shed 136.35 points to 9,311.22 after rising more than 14 percent on Tuesday for its biggest one-day gain ever. The broader Topix lost 2.4 percent to 933.52. HARD TIMES AHEAD Some Tokyo market participants said that while the worst might be over for now, tough times ahead were likely, making further substantial gains difficult. "Attention in the market is now shifting more to the economy and earnings, especially with U.S. bank earnings coming up soon. The market will really be watching those," said Katsuhiko Kodama, senior strategist at Toyo Securities. "It appears the Nikkei may have hit the bottom, but recovering to 10,000 may be hard for now." Despite the Nikkei's Tuesday surge, it still remains down 17.3 percent on the month. Among the biggest drags on the Nikkei 225 by volume weight were automakers, with Honda Motor (7267.T: Quote, Profile, Research, Stock Buzz) down 6 percent at 2,335 yen and Toyota shedding 4.6 percent to 3,550 yen. Sony Corp (6758.T: Quote, Profile, Research, Stock Buzz) slipped 7.4 percent to 2,580 yen and Canon Inc (7751.T: Quote, Profile, Research, Stock Buzz) was down 1.4 percent at 3,550 yen after the yen gained broadly on global economic worries. The dollar retreated to around 101.27 from a Tuesday high above 103 yen. Elpida was hit by sell orders indicated at 1,183 yen after it said it would likely post a 40 billion yen ($392 million) half-year operating loss due to price cuts amid a slowing economy -- a much bigger loss than the market had expected. Shippers sank as freight rates extended their tumble, with the Baltic Exchange's chief sea freight index for global raw materials trade .BADI down more than 8 percent on Tuesday. Mitsui OSK Lines Ltd (9104.T: Quote, Profile, Research, Stock Buzz) dropped 10 percent to 606 yen and Kawasaki Kisen Kaisha Ltd (9107.T: Quote, Profile, Research, Stock Buzz) lost 8.8 percent to 454 yen. Nippon Yusen (9101.T: Quote, Profile, Research, Stock Buzz) shed 8.1 percent to 489 yen. Trade was light on the Tokyo exchange's first section, with 1.07 billion shares changing hands, compared with last week's morning average of 1.29 billion. Declining stocks outpaced advancing ones by more than 2 to 1. (Reporting by Elaine Lies; Editing by Edwina Gibbs)

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