By Patrick Rial Nov. 20 (Bloomberg) -- Japanese stocks slumped, sending the Nikkei 225 Stock Average below 8,000, as the deepening global recession eroded earnings at insurers and prompted the fastest drop in exports in almost seven years. Tokio Marine Holdings Inc., Japan's largest casualty insurer, plunged 15 percent after it and six listed peers cut profit forecasts as shareholdings plunged. Isuzu Motors Ltd., which generates a third of its sales in Asian markets, lost 11 percent after slashing payrolls to cope with lower overseas demand. Mitsubishi Corp., Japan's biggest trading company, plummeted 11 percent as commodities retreated. The Nikkei 225 dropped 409.76, or 5 percent, to 7,863.46 as of 12:50 p.m. in Tokyo, the lowest since Oct. 28. The broader Topix index slid 36.71, or 4.4 percent, to 790.72. ``U.S. consumers have overextended themselves and the consequence of their retrenching is that there won't be any growth for the next five years,'' said Takashi Kamiya, who helps oversee $16 billion as chief economist at T&D Asset Management Co. in Tokyo. ``Long-term investors would be better off staying out of the stock market right now.'' In New York, the Dow Jones Industrial Average sank to the lowest since March 2003 as consumer prices and housing starts plunged and the chances for a U.S. automaker bailout package dwindled, heightening concerns for a protracted recession. The Nikkei has fallen 49 percent this year, as the credit crisis triggered by the collapse of the U.S. housing market fed into a global recession. More than half of Japanese companies cut their profit forecasts when reporting midterm earnings during the past two months, according to Shinko Research Institute Co. Longer Recession Japan's exports fell 7.7 percent in October from a year earlier, the biggest drop since December 2001, the government said today. Tetsufumi Yamakawa, chief economist at Goldman, Sachs & Co. in Tokyo, said the nation's recession will likely be longer than average, changing his forecast for economic expansion in 2009 to a contraction. U.S. consumer prices plunged 1 percent last month, the most since records began in 1947, while housing starts tumbled to an annual rate of 791,000, an all-time low. Tokio Marine fell by its daily limit of 400 yen, or 15 percent, to 2,220. The company slashed its profit forecast for the year ending in March, citing the declining value of investments. T&D Holdings Inc., Japan's largest publicly traded life insurer, tumbled by its limit of 14 percent to 2,970 yen. The company reduced its profit estimate by 95 percent. A gauge of insurers lost 15 percent, the biggest decline among the 33 industry group included in the Topix and the sector's sharpest sell-off since Black Monday. `Alarm Bell' Investments in hedge funds and private equity by T&D ``raises an alarm bell on the asset allocation,'' John Russell, a Hong Kong-based analyst at HSBC Holdings Plc, wrote in a note to clients. Russell cut T&D to ``neutral'' from ``outperform.'' Isuzu, which counts Thailand as its largest overseas market, fell 11 percent to 132 yen. The company said today it will cut all 1,400 of its temporary workers as truck sales are expected to fall. Morgan Stanley cut the shares to ``equal weight'' today. Sony, the maker of the PlayStation 3 game console, retreated 4.8 percent to 1,857 yen. Nippon Electric Glass Co., the world's third-biggest maker of glass for flat-panel televisions, fell 13 percent to 497 yen. Japan's shipments to Asia fell 4 percent in October, today's report on exports showed, the first decline in more than six years. Exports to China fell for the first time in three years. Commodities Slump Mitsubishi, which gets more than half of its earnings from commodities, retreated 12 percent to 986, the lowest since July 2004. Rival Itochu Corp. declined 9.5 percent to 408 yen. A measure of six metals traded on the London Metal Exchange, including copper and zinc, fell 3.9 percent. Crude oil slumped to as low as $52.96, a level not seen since January 2007. Sumitomo Mitsui Financial Group Inc., Japan's third-largest listed bank, lost 10 percent to 282,500 yen after saying yesterday it plans to raise as much as 400 billion yen ($4.1 billion) by selling securities. ``The Japanese banking system has taken an unexpected turn for the worse with all of these lenders raising capital,'' said T&D's Kamiya. ``If the banks get in trouble, the economy will take a big hit.'' Mitsubishi Estate Co., the nation's No. 2 property developer, tumbled 10 percent to 1,112 yen. Nomura Real Estate Holdings Inc., with more than $3 billion in annual sales, fell 11 percent to 1,204 yen. The Tokyo Stock Exchange REIT Index fell to a record low. Commercial land prices in Tokyo dropped 6.2 percent from the previous year, according to a survey from the Japan Real Estate Institute released yesterday. That was the first decline since 2004. Residential property fell 8.2 percent. Nikkei futures expiring in December dropped 5 percent to 7,860 in Osaka and slid 5.2 percent to 7,860 in Singapore. To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net

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