Nikkei falls on Hitachi plunge, earnings gloom

                                
 * Nikkei extends Friday losses, down 0.5 percent
                                
 * Hitachi dives over 18 pct at one point on loss forecast
                                
 * Panasonic also may tumble into red, falls 1.3 percent
                                
 * Fall in US GDP by 3.8 percent underlines grim situation
 (Adds stocks, details)
                                
 By Elaine Lies
                                
 TOKYO, Feb 2 (Reuters) - Japan's Nikkei stock average fell
0.5 percent on Monday as Hitachi Ltd <6501.T> plunged after it
warned of a record $7.8 billion loss on weak sales, a firmer yen
and restructuring costs amid growing global economic gloom.
Panasonic Corp <6752.T> also slid after a source with
knowledge of the matter said it was set to book an annual $3.9
billion net loss, making it the latest firm likely to tumble into
the red. [ID:nT305489]
                                
 Others that forecasted gloomy earnings numbers on Friday
include Mizuho Financial Group <8411.T>, Honda Motor Co <7267.T>,
Fujitsu Ltd <6702.T> and NEC <6701.T>. Media have reported that
Sharp Corp <6753.T> will also likely fall to a net loss for the
year to March.
The dismal outlook for many such firms was underlined by data
showing the U.S. economy shrank 3.8 percent in the fourth
quarter, its fastest pace in 27 years, though analysts had
predicted an even steeper fall.
                                
 "There's no question that the global economy has worsened a
notch more, and concerns about this will be in a tug-of-war with
expectations for economic stimulus policies," said Hiroichi
Nishi, general manager at the equity division of Nikko Cordial
Securities.
                                
 U.S. President Barack Obama, under pressure to move swiftly
to get his nearly $900 billion economic recovery plan through
Congress by mid-February, called Congressional leaders to a
meeting on Monday to drive home his message of urgency.
[ID:nN01420749]
The growing economic gloom helped send the yen higher, but by
midday the dollar had erased some of its losses, trading at
around 89.83 yen <JPY=>.
                                
 A strong yen eats into Japanese exporter profits when they
are repatriated, making investors fret if the currency rises.
                                
 "Given how bad economic fundamentals have gotten, the market
is really hoping for stimulus plans, especially now that the U.S.
plan has passed the House of Representatives," said Yutaka Miura,
senior technical analyst at Shinko Securities.
He added that despite the dismal economic landscape the
Nikkei was unlikely to fall sharply, nothing that the Dow Jones
Industrial average managed to close above the 8,000 level
recently, and the dollar has clung around 90 yen.
                                
 The benchmark Nikkei <.N225> shed 38.30 points to 7,955.75
after earlier falling more than 2 percent to 7,795.27, extending
Friday's loss of 3.1 percent that capped a monthly loss for
January of 9.8 percent.
                                
 The broader Topix <.TOPX> lost 1.1 percent to 785.40.
                                
 EARNINGS SHADOW
                                
 Though Miura said he thought the recent run of poor earnings
is exerting an increasingly minimal impact on the overall market,
others were less sanguine.
"We've just had one bad set of results after another, and
while bad results had been factored in, the actual numbers were
worse than expected," said Masayoshi Okamoto, head of trading at
Jujiya Securities.
                                
 Hitachi tumbled 14.3 percent to 252 yen after the company
warned of a record annual loss -- a loss that would be the worst
ever by a Japanese manufacturer. [ID:nT249327]
                                
 At one point its shares were down more than 18 percent.
                                
 Panasonic shares fell 1.3 percent to 1,085 yen after a
source, who spoke on condition of anonymity because the
information is not yet public, confirmed a report by the Yomiuri
newspaper that Panasonic was facing a loss of 350 billion yen
($3.89 billion) for 2008/09. [ID:nT305489]
                                
 The loss would be Panasonic's biggest since the firm posted a
loss of about 430 billion yen for 2001/02.
                                
 Banks slipped after their U.S. counterparts fell on worries
about whether a 'bad bank' to soak up bad assets will be set up
or not.
                                
 Mitsubishi UFJ Financial Group <8306.T> fell 4.1 percent to
489 yen and Mizuho Financial Group lost 5.3 percent to 215 yen.
The banking subindex <.IBNKS.T> lost 2.7 percent, the
third-biggest loser among the subindices.
                                
 But Daiichi Sankyo <4568.T> bucked the trend, rising 2.9
percent to 2,100 yen after U.S. regulatory staff on Friday
recommended approval of Eli Lilly and Co and Daiichi Sankyo's
anti-clotting drug prasugrel.
                                
 Trade was active on the Tokyo exchange's first section, with
931 million shares changing hands, compared with last week's
morning average of 861 million.
                                
 Declining stocks outpaced advancing ones, 879 to 666.
 ($1=90.00 yen)
 (Editing by Brent Kininmont)