Japanese stocks fell yesterday, led by exporters such as Toyota Motor Corp and Canon Inc, after a US manufacturing index dropped by the most in three years, raising concern the pace of growth in world's largest economy is slowing.

　　Lenders such as Mizuho Financial Group Inc and retailers including Aeon Co advanced after the central bank's Tankan survey of business sentiment showed companies in the services industry became optimistic for the first time in seven years

　　The global economic outlook "makes it difficult to make new bets on exporters' stocks," said Ken Yamada, who helps manage US$10 billion in global equities at Kayne Anderson Rudnick Investment Management LLC in Los Angeles. "The latest Tankan report is a confirmation of Japan's economic recovery."

　　The Nikkei 225 Stock Average declined 0.3 percent to 11,683.42, while the broader Topix shed 0.4 percent to 1175.01 at the close yesterday in Tokyo. Carmakers and computer-related stocks accounted for most of the index's decline.

　　Japanese benchmarks had their biggest fiscal-year gains in 31 years on Wednesday, fueled by optimism an export-driven recovery has started to spread into the domestic economy. The Nikkei climbed 47 percent in the period, while the Topix soared 50 percent.

　　Toyota, the world's second-largest carmaker, fell 3.6 percent to 3,740 yen (US$36.05). Canon, the world's largest maker of digital cameras, declined 2 percent to 5,280 yen. Canon gets 70 percent of its revenue from overseas.

　　The National Association of Purchasing Management-Chicago said its main business index dropped to 57.6 this month from 63.6 last month. The decline was the biggest in three years, as hiring plans and production both weakened.

　　Meanwhile, the Bank of Japan's Tankan quarterly index of business confidence among large service-related companies rose to 5 from zero, while executives at large manufacturers' sentiment rose to a seven-year high of 12 in March from 7 in December.

　　The figures beat the median forecasts of 4 and 10. Levels above zero means optimists outnumber pessimists.

　　Mizuho, Japan's biggest bank, climbed 2.2 percent to 458,000 yen. Millea Holdings Inc, the nation's largest casualty insurer, added 2.5 percent to 1.66 million yen. Aiful Corp, Japan's No. 1 consumer lender, advanced 6.5 percent to 11,360 yen.

　　Aeon, Japan's No. 2 retailer, rose 2.2 percent to 4,590 yen. Fast Retailing Co, the operator of Japan's Uniqlo casual clothing stores, added 4.7 percent to 8,910 yen.

　　Elsewhere in Asia, South Korea's Kospi index rose 0.3 percent to 882.75 as Samsung Electronics Co, the country's largest exporter, surged to an all-time high. A government report showed overseas shipments climbed to a record in March.

　　Shipments jumped 40 percent from a year earlier to US$21.5 billion after climbing 45 percent in February, the commerce ministry said in Seoul. That's more than the median 36 percent increase forecast in a Bloomberg News survey of 12 economists.

　　Samsung Electronics, which accounts for about 10 percent of South Korea's exports, rose 0.5 percent to 575,000 won (US$503.88). It gained 7.5 percent over the past five days.

　　In Thailand, the SET Index climbed 2.8 percent, the biggest advance among the region's benchmarks, amid expectations of rising economic growth.

　　PTT Pcl, Thailand's largest energy company, rose 3.6 percent to 145 baht (US$3.71). Advanced Info Service Pcl, the nation's biggest mobile-phone company by subscribers, gained 3.6 percent to 86.5 baht.

　　The government forecasts the economy growing as much as 8 percent this year, after expanding 6.7 percent last year. Overseas investors yesterday bought 375 million baht more Thai shares than they sold, a second day of net buying.

　　The MSCI Asia Pacific Index, which tracks more than 800 stocks in the region, lost 0.1 percent, its first decline in seven days. All other benchmarks rose in the region apart from those in Hong Kong, New Zealand, Indonesia and Malaysia.

　　(Bloomberg News)