TOKYO, Oct 16 (Reuters) - The Nikkei average tumbled nearly 10 percent on Thursday after weak U.S. economic data intensified fears that recent bank rescue measures by world authorities will not be enough to stave off a global recession. The benchmark Nikkei's 9.63 percent decline by midafternoon trade put it just a breath away from marking the biggest one-day loss since the 1987 stock market crash. It fell 9.62 percent on Friday. Shares most susceptible to the health of the global economy such as Canon Inc (7751.T: Quote, Profile, Research, Stock Buzz) and trading house Mitsubishi Corp (8058.T: Quote, Profile, Research, Stock Buzz) took a heavy beating, though Tokyo shares slid across the board. "The deteriorating economy is coming into the spotlight as fears over the financial system, which had been the main factor for market sell-offs up to now, are easing gradually," said Yoshinori Nagano, chief strategist at Daiwa Asset Management. "The sectors that reflect fears over the global economy the most are shipping firms and trading houses ... Just as financial worries started calming down after a series of measures, we'll need steps to deal with the economy." Fears of a recession were stoked as monthly U.S. retail sales showed their biggest fall in more than three years and after Federal Reserve Chairman Ben Bernanke said the U.S. economy faced a "significant threat" from paralysed credit markets. [.N] In Japan, a Reuters poll showed manufacturing business sentiment hit a six-year low in October, in another sign the world's second-biggest economy is on the brink of recession. [ID:nTFD003047] The Nikkei average .N225 shed 919.06 points to 8,628.41, still holding above 8,115.41 touched last week, which was its lowest point since May 2003. It is poised to erase a majority of the gains made on Tuesday, when it soared more than 14 percent. The broader Topix index lost 7.7 percent to 881.70. Wall Street had its worst day since the 1987 stock market crash on Wednesday, as bleak economic data fed worries that all the efforts to unlock credit markets may not avert a recession. Japanese Prime Minister Taro Aso also said on Thursday that share price falls show that markets believe the U.S. bank bailout plan may not be enough to fix the financial crisis. "The markets are selling off stocks because investors still think the steps by U.S. authorities are not sufficient," Aso told parliament. EXPORTERS HIT Canon and other exporters were hit hard as the dollar remained weak against the yen, while trading houses were also battered as oil hit a 13-month low amid growing worries that a deepening economic slowdown will eat into already weakening demand. Among exporters, Canon sank 8.2 percent to 3,150 yen while Sony Corp (6758.T: Quote, Profile, Research, Stock Buzz) tumbled 10.3 percent to 2,390 yen. Honda Motor Co (7267.T: Quote, Profile, Research, Stock Buzz) fell 8.9 percent to 2,145 yen. The dollar had risen to around 100.15 yen though the yen remained strong as growing economic fears sent investors out of risky assets. Trading houses were hard hit. Mitsubishi Corp (8058.T: Quote, Profile, Research, Stock Buzz) shed 15.2 percent to 1,677 yen and Mitsui & Co (8031.T: Quote, Profile, Research, Stock Buzz) tumbled 17 percent to 978 yen. Shipping firms also fell, with Mitsui OSK Lines Ltd (9104.T: Quote, Profile, Research, Stock Buzz) sinking 14.7 percent to 535 yen. (Reporting by Aiko Hayashi; Editing by Michael Watson)

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