Nikkei hits 3-week low but consumer lenders jump

                                
 * Exporters hurt by yen; Sony falls after earnings
                                
 * CIT, Citi news spark worry about financials - analysts
                                
 * Consumer lenders soar on news govt may ease lending rules
                                
 By Aiko Hayashi
                                
 TOKYO, Nov 2 (Reuters) - The Nikkei average slid 3 percent
on Monday to mark its lowest point in three weeks, with
exporters hit by a stronger yen and after weak U.S. consumer
spending data sparked a sell-off on Wall street.
                                
 Bank shares such as Mitsubishi UFJ Financial Group <8306.T>
fell after accounting expert Robert Willens said Citigroup <C.N>
was likely to have a $10 billion fourth-quarter charge on its
deferred tax assets, sparking worries about the sector.
[ID:nN30427238]
                                
 Analysts also cited CIT Group's <CIT.N> bankruptcy filing on
Sunday as further negative news for the market. CIT is a U.S.
lender to hundreds of thousands of small and medium-sized
businesses. [ID:nN01408863]
                                
 "Economic indicators are beginning to show uncertainty about
the future, despite solid corporate earnings results so far,"
said Yutaka Miura, a senior technical analyst at Mizuho
Securities.
                                
 "We have a bunch of news including CIT that is making
investors nervous about the outlook for the economy as well as
earnings going forward."
                                
 In moderate trade, the benchmark Nikkei <.N225> shed 2.7
percent to 9,762.66 by the midday break, after falling as much
as 2.98 percent to 9,736.14, its lowest since Oct. 7.
                                
 The broader Topix <.TOPX> lost 2.1 percent to 875.66.
                                
 The S&P <.SPX> lost 2.8 percent on Friday as the fragility
of the U.S. economic recovery was highlighted by economic
reports that showed U.S. consumers cut spending in September and
consumer sentiment turned gloomier this month. [ID:nN30482062]
                                
 But consumer lenders including Aiful Corp <8515.T> soared
after the Nikkei business daily said on Sunday that Japan would
consider reversing its tightening of regulations on moneylenders
to help self-employed business owners following the financial
crisis. [ID:nT83915] [ID:nT79045]
                                
 EXPORTERS HIT, CONSUMER LENDERS JUMP
                                
 Among exporters, Kyocera Corp <6971.T> sank 4.1 percent to
7,430 yen and Canon Inc <7751.T> lost 4 percent to 3,390 yen.
Honda Motor Co <7267.T> slid 2.8 percent to 2,800 yen.
                                
 The yen <JPY=> rose to two-week highs against the dollar
around 89.20 yen in early Asia trade. Investors fret about a
stronger yen as it eats into exporters' profits when they are
repatriated.
                                
 Sony Corp <6758.T> dropped 5.8 percent to 2,625 yen after
posting on Friday its fourth consecutive quarterly loss in
July-September, hit by sluggish cellphone sales and as it cut
prices of its PlayStation 3 game console. [ID:nT247231]
                                
 Bank shares fell, with Japan's top bank Mitsubishi UFJ
falling 2 percent to 485 yen and Mizuho Financial Group <8411.T>
slipping 1.6 percent to 180 yen.
                                
 CIT's bankruptcy, one of the largest in U.S. corporate
history, had been widely expected for months, but it could
further constrict credit and weigh on the fragile U.S. economy.
                                
 But Japanese consumer lender Aiful soared 21.1 percent to
161 yen, while Takefuji <8564.T> surged 23.1 percent to 427 yen.
Credit Saison Co Ltd <8253.T> jumped 19.1 percent to 1,241 yen.
                                
 "Easing of regulations will be a good news in the short
term," said Takahiko Murai, general manager of equities at
Nozomi Securities.
                                
 "But the situation surrounding the industry remains that
those seeking funds are small to mid-sized companies who may be
at risk of going bankrupt, not large corporations."
                                
 Sanyo Electric Co <6764.T> gained 2.2 percent to 233 yen
after the Nikkei business daily said the company has agreed with
PSA Peugeot Citroen <PEUP.PA> to supply nickel-metal hydride
batteries for the French carmaker's diesel-electric hybrid cars.
[ID:nT81803]
                                
 The Nikkei also said Panasonic Corp <6752.T> will launch its
tender offer for shares of smaller rival Sanyo as early as
Thursday, after that deal won approval from Chinese regulators.
[ID:nT113829]
                                
 Some 929 million shares changed hands on the Tokyo
exchange's first section, roughly in line with last week's
morning average.
                                
 Declining stocks outnumbered advancing ones by more than 4
to 1.
 (Editing by Chris Gallagher)