BEIJING, Feb.1 -- Japanese stocks fell, paced by exporters such as Toyota Motor Corp and Sony Corp, on speculation that European finance ministers will seek to halt a slide in the yen against the euro that has boosted earnings.

    Exporters' "earnings are benefiting quite a lot from a weak yen, so if that situation changes, expectations for the companies will decline," said Hiroshi Chano, who helps look after 7.3 billion U.S. dollars at Yasuda Asset Management Co in Tokyo.

    Companies such as Honda Motor Co that rely on US sales also fell on concern a comment by the Federal Reserve may damp investor expectation that the central bank will cut interest rates within the first half of this year.

    The Nikkei 225 Stock Average fell 106.77, or 0.6 percent, to 17,383.4. The broader Topix index dropped 9.64, or 0.6 percent, to 1,721.96. A measure tracking auto makers was the biggest contributor to the index's decline.

    Nikko Cordial Corp plunged after investigators determined that the managers of the brokerage intentionally misreported transactions to inflate profit.

    Toyota, the world's second largest car maker, fell 90 yen (74 US cents), or 1.1 percent, to 7,950. Sony, the world's biggest maker of video-game consoles, slid 80 yen, or 1.4 percent, to 5,550. Canon Inc, the world's largest digital camera maker, lost 40 yen, or 0.6 percent, to 6,350.

    The yen was about 8.2 percent weaker against the euro during the three months to December 31, adding 57.7 billion yen (475 million dollars) to Sony's operating profit, or sales minus the cost of goods sold and administrative expenses, Sony said yesterday.

    Canon, whose biggest overseas market is Europe, said on Monday that this year's operating profit will be affected by 5.6 billion yen for every yen change against the euro.

    European finance ministers are stepping up their complaints about the yen's 10 percent decline against the euro in the past year as next week's Group of Seven meeting nears. Both Germany's Finance Minister Peer Steinbrueck and his French counterpart, Thierry Breton, said yesterday that the yen will be debated by the G7.

    The yen recently traded at 157.26 per euro against a record low of 158.62 on January 24.

    A stronger yen means Japanese exporters get less for their overseas sales when converted back to local currency while their products become less competitive.

    Honda, Japan's second-largest auto maker by sales, declined 60 yen, or 1.3 percent, to 4,750.

    (Source: Shanghai Daily)