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Japanese shares drop on Toyota outlook

TOKYO — Japanese shares dropped Friday as selling spread across the board following Toyota's bleak earnings projection.

The benchmark Nikkei 225 index sank 287.92 points, or 2.06 percent, to 13,655.34.

(enlarge photo) A passer-by looks at an electronic stock indicator in Tokyo, Friday, May 9, 2008. Japanese shares dropped Friday as selling spread across the board following Toyota's bleak earnings projection. The benchmark Nikkei 225 index sank 287.92 points, or 2.06 percent, to 13,655.34. (AP Photo/Koji Sasahara)

"Investors were spooked by Toyota's sluggish earnings reports and its weak profit outlook," said Tsuyoshi Segawa, an equity strategist at Shinko Securities Co. in Tokyo.

Just as markets closed Thursday, Toyota said its net profit in the fiscal fourth quarter dropped 28 percent due to a strong yen and sluggish U.S. sales. It also projected this fiscal year's profit will tumble 27 percent — which would be its first decline in annual earnings in seven years.

"The market was feeling the impact of Toyota's reports today, and investors were turning cautious, taking a wait-and-see stance ahead of more corporate results next week," Segawa said.

Toyota Motor Corp. shares dropped 3.3 percent to 5,300 yen. Other automakers also got hit. Nissan Motor Co. fell 1.6 percent to 945 yen and Honda Motor Co. lost 3.9 percent to 3,210 yen.

Sony Corp. was down 3.1 percent to 4,620 yen.

Internet and mobile phone provider Softbank Corp. fell 2.7 percent to 1,984 yen even though its net profit more than doubled in the fourth quarter, according to figures released Thursday.

The Topix index of all the Tokyo Stock Exchange First Section fell 31.19 points, or 2.3 percent, to 1,341.76

In currency trading, the U.S. dollar was quoted at 103.50 yen midafternoon in Tokyo, down from 104.17 yen in New York late Thursday. The euro stood at $1.5432, up from $1.5404 late Thursday in New York.

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