Nikkei Index Falls to 15-Month Low

A strong yen affects the performance of Japanese exporters by reducing their foreign earnings in yen terms and by making their products more expensive in key markets. The second could especially hurt in what's already expected to be a weak U.S. holiday shopping season.

The Nikkei 225 average shed 241.69 points, or 1.57 percent, on the Tokyo Stock Exchange, to 15,154.61. It was the Nikkei's second lowest close this year. On Tuesday, the index finished at 15,126.63 points, the lowest close since July 2006.

November has been a brutal month for the index. Since the beginning of the month the Nikkei has lost 9.5 percent, its worst monthly start since September 2001, when it dropped to a 16-year low in the aftermath of the terrorist attacks in New York.

"There is no doubt that stocks are undervalued right now but that's not the issue," said Mitsushige Akino, manager at Ichiyoshi Investment Management.

"Expectations are growing that the (U.S.) Christmas shopping season will be a disappointing one and everyone has become sensitive to that issue now" and is watching for any indicators of how subprime woes are really affecting final demand, he said.

Among blue chips, Toyota Motor Corp. fell 1.8 percent to 6,110 yen, and Toshiba Corp. skidded 2.4 percent to 855 yen.

The tough times continued for major banks amid lingering concerns about subprime loan losses. Mizuho Financial Group Inc. lost 2.6 percent to 532,000 yen.

Some smaller banks turned higher in late trading after Bank of Yokohama, one of Japan's largest regional banks, reported interim-period profit growth. Shares in the bank rose 3.6 percent to 775 yen.

The Topix index of all Tokyo Stock Exchange First Section issues lost 1.8 percent to finish at 1,471.67.

In currency dealings, the dollar was trading at 110.17 yen midafternoon, down from 110.39 yen late Thursday in New York. The euro rose to $1.4616 from $1.4612.