RTRS: Nikkei drops 3.5 pct on bank woes, nears 26-yr low
* Nikkei falls 3.5 pct, hits 4-month closing low * Down 5.2 pct on week, the worst in six weeks * GM warning, financial sector worries hit confidence * Many believe public pension funds supporting market * Little impact from Japan's plan to extend short-selling curbs
By Rika Otsuka
TOKYO, March 6 (Reuters) - Tokyo's Nikkei average dropped 3.5 percent to hit a four-month closing low on Friday, with shares falling across the board, after General Motors (GM.N) warned of possible bankruptcy and concerns intensified over the U.S. financial sector.
Japan's Financial Services Agency plans to extend curbs on short-selling of stocks beyond the end of this month, two sources familiar with the matter said, but the news appeared to have little impact on the stock market, analysts said. [ID:nT92242]
U.S. stocks slid on Thursday with the Dow and S&P falling to 12-year lows, with shares of Citigroup (C.N), once the world's largest bank by market value, trading below $1 for the first time. [ID:nN05328477]
The Nikkei fall was slightly less steep in than the 4 percent declines in the U.S. benchmarks, with market participants saying buying by what they believe to be public pension funds has been supporting the Nikkei when it approaches a 26-year low just under 7,000 in late October.
"Financial fears have resurfaced both in America and Europe," said Takahiko Murai, general manager of equities at Nozomi Securities.
"Citi's stock price broke below $1, while UK institutions and others in Europe have lent money to peers in Eastern Europe where the economies are in extremely poor condition," he said.
In Tokyo, Monex Group Inc (8698.T) lost over 7 percent after a newspaper reported Citigroup plans to sell its 26 percent stake in the Japanese online broker as part of the struggling U.S. bank's efforts to raise cash. [ID:nT172464]
Fuji Heavy Industries Ltd (7270.T), the maker of Subaru brand cars, tumbled 7 percent after it applied for a low-interest loan offered by the state-run Development Bank of Japan to finance its business.
The benchmark Nikkei ended down 260.39 points in moderate trade at 7,173.10. It it had gained 2 percent the previous day, the first time it has risen for two straight days since late January, on hopes for bigger economic stimulus plans in China.
On the week, it lost 5.2 percent, its worst performance in six weeks.
The broader Topix declined 2.7 percent to 721.39, a fresh 25-year closing low.
"Japanese stocks are going be extremely weak until U.S. stock market regains some composure," said Yoshinori Nagano, senior strategist at Daiwa Asset Mamagement.
"But U.S. stocks won't be able to do that until investors investors fully grasp how bad things are at U.S. banks."
Banks were among the biggest sufferers on global financial sectors worries.
