Japan's Nikkei average fell 0.4 percent on Tuesday as a firmer yen and growing uncertainty about a U.S. bank rescue plan pared earlier gains, while some exporters fell after the yen surged against the euro. A report in Japan's Nikkei business daily that Russian private lenders will ask Moscow to renegotiate with European and other foreign banks to postpone repayment on up to $400 billion of its private-sector debt sent the euro down against the dollar and the yen, though it later recovered slightly. Nissan Motor Co surged over 6 percent after it announced drastic steps on Monday to cope with the recession, saying it would cut 20,000 jobs and joined a growing list of automakers warning of red ink this year Investors were spooked by conflicting reports about the U.S. bank bailout and the fate of a "bad bank" to buy distressed assets from commercial banks as part of a financial rescue package, after announcement of the plan was pushed back a day to Tuesday. Three sources briefed on the plan, which is set to be announced at 11 a.m. (1600 GMT) on Tuesday, told Reuters it included a public-private partnership that could buy up to $500 billion of distressed assets, but not a standalone government "bad bank". "It's starting to seem as if the economic stimulus plan will be approved one way or another, but the bank bailout is really important, and this uncertainty is growing," said Takashi Ushio, head of the investment strategy division at Marusan Securities. "What sort of partnership? Will the $500 billion be enough? There's a lot of unknowns that make it hard to trade at this point, though at the very least it does seem as if the government may abandon the idea of handling the 'bad bank' on its own." Japanese investor wariness is compounded by a Japanese market holiday on Wednesday, since shares will have two days' worth of Wall Street moves after the plan is announced to process by the time the Tokyo market reopens. U.S. stock futures slipped but had crawled from lows touched in early trade after a media report that the "bad bank" scheme was being abandoned, indicating a lower opening on Wall Street. President Barack Obama's drive for emergency tax cuts and government spending to jolt the U.S. economy out of recession advanced on Monday when the Senate voted to end debate on an $827 billion bill, setting up a vote on Tuesday. The benchmark Nikkei fell 34.01 points to 7,935.02 while the broader Topix fell 0.1 percent to 778.05. The yen's advance against the dollar, which fell 0.1 percent to 91.32 yen, and the euro led exporters lower. Investors worry about a stronger yen because it eats into exporters' profits when they are repatriated. Sony Corp lost 1 percent to 1,813 yen and Honda Motor Co edged down 0.2 percent to 2,250 yen. Toyota Motor Co lost 0.3 percent to 3,180 yen.

Source