Flight from risk pushes Nikkei to 7-wk low; Toyota up

                                
 * Toyota gains after analysts say earnings encouraging
                                
 * Exporters hurt by strong yen, slide on Wall St.
                                
 * Investors cut risk-taking on Europe worry -analyst
                                
 By Aiko Hayashi
                                
 TOKYO, Feb 5 (Reuters) - The Nikkei average fell more than 3
percent to hit its lowest in seven weeks on Friday, with
exporters hurt by a stronger yen, while escalating sovereign debt
problems in Europe dented investor confidence in riskier assets
including equities.
                                
 Mitsui & Co <8031.T> and other resource-linked shares took a
beating after a key commodities index saw its biggest daily loss
in almost six months on Thursday, hit by a 5 percent fall in
crude oil and a steep fall in gold. [COM/WRAP]
                                
 But Toyota Motor Corp <7203.T> inched up to become one of the
few gainers on the benchmark Nikkei <.N225> after analysts said
its earnings results had been encouraging despite mounting recall
woes.
                                
 Toyota said on Thursday its biggest-ever safety recall would
cost it up to $2 billion this quarter, but raised its outlook for
the financial year ending in March after a forecast-beating third
quarter. [ID:nTOE61300G]
                                
 "Growing uncertainty in Europe is prompting investors to
shrink their risk assets globally," said Yutaka Miura, a senior
technical analyst at Mizuho Securities.
                                
 "The market's main focus is no longer on domestic earnings
but on whether the global stock markets will continue to slide or
the yen will strengthen further."
                                
 The benchmark Nikkei <.N225> slid 2.8 percent to 10,062.65,
after earlier falling as much as 3.1 percent to 10,036.33, its
lowest since Dec. 18.
                                
 The broader Topix <.TOPX> declined 2.3 percent to 890.58.
                                
 Worries over the ability of Greece, Portugal and Spain to pay
their debts fuelled a flight from stocks to the safe-haven U.S.
dollar on Thursday, which hurt commodity prices denominated in
the greenback. The S&P 500 Index <.SPX> dropped 3.1 percent.
                                
 Mitsui & Co lost 5 percent to 1,286 yen, while fellow trader
Mitsubishi Corp <8058.T> shed 3.4 percent to 2,115 yen. Oil and
gas field developer Inpex <1605.T> slid 1.9 percent to 658,000
yen.
                                
 Exporters slid on a drop in U.S. stocks and worries about a
stronger yen. The dollar recouped some ground against the yen
<JPY=>, after earlier falling below 89 yen to its lowest since
mid-December. [FRX/]
                                
 Canon Inc <7751.T> shed 3.4 percent to 3,555 yen and Kyocera
Corp <6971.T> lost 3.4 percent to 7,900 yen. Honda Motor Co
<7267.T> declined 3.3 percent to 3,115 yen.
                                
 But Sony Corp <6758.T> rose 0.7 percent to 3,095 yen after it
halved its annual loss forecast on a rebound in its flat-TV
business and cost cuts. [ID:nTOE61103O]
                                
 Toyota shares gained 0.2 percent to 3,285 yen. Nomura
Securities analyst Shotaro Noguchi cut his target price on Toyota
to 4,000 yen from 4,800 but reiterated his "buy" rating, saying
that he expected substantial improvement in earnings even
factoring in risk.
                                
 As of Thursday, shares in Toyota had lost as much as 23
percent, or $30 billion, in the two weeks since it announced a
multi-million-vehicle recall for sticky accelerator pedals in
North America, which has spread to most regions in the world.
                                
 It also faces the possibility of another recall, as U.S.
safety regulators opened a probe on Thursday into a braking
problem on the Prius, the world's top-selling hybrid.
[ID:nN04116985]
  (Editing by Edwina Gibbs)