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Date: Tuesday 26 Aug 2008

LONDON (ShareCast) - Credit market woes on Wall Street spread into Japanese trading Tuesday, with financials such as Mitsubishi UFJ Financial weighing heavily on the Nikkei.

Fresh fears about the duration of the credit market problems were prompted by Credit Suisse which cut its third quarter profit forecast and lowered its 12-month price target on insurance giant American International Group. Sumitomo Mitsui Financial tracked the overall decline among financials.

In broker news Fukuoka Financial fell sharply after HSBC downgraded the stock to “underweight'' from “neutral,'' on concern about a rise in property defaults.

The benchmark Nikkei 225 index closed down 99 points at 12,778.

HSBC also cut its rating on lender Bank of Yokohama, sending its shares into the red. The broker cited concern about the surge in bankruptcies in Japan in July among construction and real estate companies. Property plays Mitsubishi Estate and Sumitomo Realty both fell.

Big name exporters such as Sony, Honda and Nissan weighed on the index despite a weaker yen against the dollar as traders struggled to shrug off the gloomy mood.

The Hang Seng tracked a decline on Wall Street overnight and gloom across Asian markets as fears about the financial sector whipped up fears about a global slowdown. Financials and real estate stocks spearheaded losses in Hong Kong.

The Hang Seng index closed down 48 points at 21,056.

Developer Sun Hung Kai headed lower while banking giant HSBC fell on Credit Suisse’s gloomy forecast for American International Group.

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