* Nikkei falls 2.6 pct, 26-yr low in sight
* Exporters hit by deteriorating global economy
* Nomura tumbles on dilution worries
* Little impact from news Japan mulling stocks support
(Adds stocks, detail)
By Aiko Hayashi
TOKYO, Feb 24 (Reuters) - Japan's Nikkei stock average slid
2.6 percent on Tuesday, hurt by exporters such as Canon Inc
<7751.T> after worries about financial system stability sent U.S.
stocks to a 12-year low.
Investors largely shrugged off a comment from Japan's finance
minister that the government was studying measures to support the
stock market, with the Nikkei briefly falling as low as 7,155.16.
That was below the Oct. 27 closing level of 7,162.90, its lowest
finish since October 1982. []
Nomura Holdings <8604.T>, Japan's largest brokerage, tumbled
more than 8 percent on dilution worries after announcing plans to
raise $3.3 billion in its first share sale in 20 years, as costs
from its purchase of Lehman Brothers assets force it to replenish
its capital. []
"This is part of the global sell-off of equities as money is
shifting to safer cash from stocks due to uncertainty about the
global economy," said Fumiyuki Nakanishi, manager at SMBC Friend
Securities.
The benchmark Nikkei <> declined 191.66 points to
7,184.50, after ending the previous day at 7,376.16, its lowest
close since Oct. 27.
The broader Topix <> retreated 1.8 percent to 721.87,
after booking a 25-year closing low for the second day in a row
on Monday.
In the United States, the S&P 500 and the Dow posted their
lowest closes since the spring of 1997 as reports the government
may convert its stake in Citigroup <C.N> into a large common
stock holding fell short of what many see as necessary to fix big
banks. []
The market took in its stride a comment by Japanese Finance
Minister Kaoru Yosano that officials had been ordered to look
into ways of supporting the stock market, including considering a
call from the head of a business lobby group for the government
to buy shares.
"Certainly this is a psychological support, but of course we
don't know anything concrete yet," said Yutaka Miura, senior
technical analyst at Shinko Securities.
EXPORTERS FALL, NOMURA TUMBLES
Amid fears of a deepening global downturn, exporters fell
even though the dollar held close to a three-month high against
the yen <JPY=>. Investors usually welcome a softer yen as it
boosts exporters' profits when repatriated.
Canon lost 3 percent to 2,290 yen and TDK Corp <6762.T> gave
up 3.6 percent to 3,180 yen.
Advantest Corp <6857.T> lost 3.8 percent to 1,280 yen after
the world's largest maker of chip testers said it would announce
its annual outlook and restructuring moves on Wednesday.
[]
Nomura sank 8.6 percent to 423 yen. Japan's top lender
Mitsubishi UFJ Financial Group <8306.T> shed 2.3 percent to 417
yen and No.2 Mizuho Financial Group <8411.T> dropped 2.7 percent
to 181 yen.
"Financial shares can't avoid falling because Japan also has
its own problems as highlighted by yesterday's bankruptcy
protection filing," said Soichiro Monji, chief strategist at
Daiwa SB Investments.
Japan's SFCG Co Ltd <8597.T>, a nonbank lender to small
companies, failed on Monday as tight credit hits businesses
throughout the economy, and shares of other nonbank finance firms
plunged on fears they face more problems. []
SFCG shares were untraded with a flood of sell orders at 892
yen, down 18.3 percent from Monday's close.
Trade was active on the Tokyo exchange's first section, with
978 million shares changing hands, compared to last week's
morning average of 819 million.
Declining shares outnumbered advancing ones by more than 3 to
1.
(Additional reporting by Elaine Lies; Editing by Brent
Kininmont)
