Japanese stocks slipped on Friday as weak economic data fed worries about a U.S. recession and spooked investors, with Canon Inc and other exporters down as the yen gained ground, Reuters reported. Shares of mobile carrier KDDI Corp tumbled to a 20-month low after it announced a new pricing plan. But metals firms, including Toho Zinc, posted a second day of hefty gains on the surge in metals prices, helping to underpin the market. The Philadelphia Federal Reserve's business activity index for the mid-Atlantic region in February slumped to its lowest level since 2001, the time of the last U.S. recession. The reading was worse than even the most pessimistic Wall Street forecast and suggested economic deterioration is occurring even faster than many analysts had expected. "It seems clear now that the financial problems in the U.S. are quite deep and won't be taken care of that easily," said Takahiko Murai, general manager of equities at Nozomi Securities. The yen's climb against the dollar after the poor U.S. data depressed exporter shares. Some market participants said the Nikkei's recent gyrations -- it hit a two-week high earlier this week, followed by a one-week low -- reflected the current tug-of-war between bad news and an underlying optimism that stocks can sustain a recovery. "Until around mid-March, I believe nearly everyone is optimistic -- and trying for -- a recovery," said Masayoshi Okamoto, head of dealing at Jujiya Securities, adding that many market players believe shares have bottomed out already. "Of course, there'll be days like this when news from the U.S. has an impact, but into March things should be strong. The situation after that is much harder to read." The optimism stems partly from data that showed foreign investors, seen as crucial for any recovery in Tokyo shares, were net buyers of stocks last week, snapping a six-week streak of selling. The benchmark Nikkei dropped 1.4 percent to 13,500.46 and slid more than 2 percent at one point. For the week the Nikkei lost 0.9 percent, and so far in 2008 it has posted only one weekly rise. The broader TOPIX finished 1.0 percent lower at 1,321.37.
