Nikkei drops to 2-month low on global growth concerns

Japan's Nikkei share average fell for the fourth straight day on Friday and hit a two-month low on concern about the strength of the global economy, but Fast Retailing Co outperformed after reporting rosy earnings.

The Nikkei share average fell 1.1 percent to 15,321.69 by mid-morning, after sliding to as low as 15,259.95 earlier, the lowest level since Aug. 13.

For the week, the benchmark has dropped 2.7 percent.

Traders said foreigners were the main sellers, spooked by recent weak data from Germany, which raised fears of a recession in Europe's largest economy. Dissatisfaction at stimulus measures introduced so far by the European Central soured sentiment as well.

"Foreigners who had chased the Nikkei and its futures in July and August are taking profits now," said Hisao Matsuura, senior strategist at Nomura Securities, adding that selling has accelerated on Friday ahead of the three-day weekend.

Japanese markets are closed on Monday for a national holiday.

Last week, foreign investors continued to shun Japanese cash stocks and futures, posting their biggest net selling in two months, which indicated that the market may have entered a correction phase after big rallies in the last month.

Exporters were sold after the dollar slipped to a three-week low of 107.53 yen. Honda Motor Co fell 2.0 percent, Canon Inc shed 1.6 percent and Tokyo Electron Ltd declined 1.5 percent.

Bucking the weakness, Fast Retailing, which operates Uniqlo clothing stores, soared 2.6 percent and was the third-most traded stock by turnover after it said it expects operating profit to grow by more than a third in the year ahead.

Social networking services provider Gree Inc jumped 11 percent after it and messaging application provider LINE Corp said they had agreed to establish a joint venture that will focus on the development and operation of mobile games for LINE GAME.

The broader Topix fell 1.7 percent to 1,239.86, and the JPX-Nikkei Index 400 declined 1.6 percent to 11,277.41.