Japan stocks fall over 3 percent, credit worries persist

                                
  (Updates to midmorning)
                                
 TOKYO, March 17 (Reuters) - Japanese stocks fell over 3
percent on Monday as the dollar hit fresh 12 year lows against
the yen and the acquisition of Bear Stearns by JPMorgan Chase
underscored the severe problems plaguing the U.S. financial
system.
                                
 The slide in stocks also came despite the announcement of a
 Federal Reserve discount rate cut.
                                
 JPMorgan Chase & Co <JPM.N> said it would buy Bear Stearns
for just $2 a share, in a deal under which the Federal Reserve
will provide special funding. [ID:nN16640873]
                                
 After an initial bounce, the dollar briefly fell below 97 yen
<JPY=>, knocking exporters such as Toyota Motor Corp <7203.T>
lower.
                                
 Electronics maker Hitachi Ltd <6501.T> tumbled hard after it
said it would post its second straight annual net loss and that a
strong yen would make a tough 2008 even tougher [ID:nT305155].
                                
 Market players said that the Fed move, while welcome, was
unlikely to soothe worries about credit markets.
"This just seems to be a stop-gap move. We need to have
something like an injection of public funds or something concrete
-- until that happens the problem really won't be solved," said
Noritsugu Hirakawa, a strategist at Okasan Securities.
                                
 "There's still a lot of unknowns and the market remains very
nervous."
                                
 At 0058 GMT the benchmark Nikkei <.N225> was down 3.2 percent
at 11,851.31, its lowest since early August 2005, and down by
nearly 400 points.
                                
 The broader TOPIX <.TOPX> was down 3.4 percent at 1,152.30
                                
 Hitachi plunged 8.5 percent to 621 yen. Japan's biggest
industrial electronics firm by sales cut its net forecast for the
year to March 31 to a loss of 70 billion yen ($696 million), from
a 10 billion yen profit.
                                
 Toyota slid 3.7 percent to 4910 yen and Honda Motor Corp
<7267.T> fell 2.9 percent to 2,735 yen.
                                
 Banks were also battered, with top lender Mitsubishi UFJ
Financial Group <8306.T> down 4 percent at 797 yen, No. 2 bank
Mizuho Financial Group <8411.T> down 3.4 percent at 367,000 yen,
and No. 3 bank Sumitomo Mitsui Financial Group <8316.T> down 3.3
percent at 646,000 yen.
  (Reporting by Elaine Lies, editing by Edwina Gibbs)