Aug. 23 (Bloomberg) -- Japanese stocks fell from a three- month high. Consumer lenders including Promise Co. declined after the Asahi newspaper said regulators are investigating lending practices at Acom Co. for a second time this year.

``We just don't know how much more bad news will come out and what will happen to the tightening of regulation for consumer lenders,'' said Masayuki Kubota, who oversees $2.1 billion at Daiwa SB Investments Ltd. in Tokyo. ``I'll continue to avoid the stocks until the outlook becomes more clear.''

Stocks of Japanese companies that do business in Europe such as Canon Inc. gained for a second day on speculation the value of their European sales will rise as the region's single currency traded close to a record against the yen.

Benchmarks swung between gains and losses. The Nikkei 225 Stock Average fell 18.14, or 0.1 percent, to 16,163.03 at the 3 p.m. close in Tokyo after gaining as much as 0.3 percent and dropping as much as 0.4 percent. The Topix index lost 1.49, or 0.1 percent, to 1640.28. It earlier rose as much as 0.2 percent.

Yesterday, the Nikkei and Topix closed at their highest since May 17.

Acom, Japan's second-biggest consumer lender, slumped 240 yen, or 4.3 percent, to 5,400, the second-biggest drop among the 1,918 stocks included in the Morgan Stanley Capital International World Index. Promise, Japan's third-largest, dropped 70 yen, or 1.3 percent, to 5,500. Orix Corp., the nation's biggest non-bank financial company, slid 400 yen, or 1.3 percent, to 31,400.

A measure of non-bank finance companies included in the Topix, fell 0.9 percent, the second-worst performer among the 33 industry groups in the broader gauge.

Regulators are now investigating Acom because the company is suspected of engaging in various illegal lending practices such as providing loans without giving borrowers all the necessary paperwork, the Asahi said.

`An Obvious Plus'

Canon, the world's No. 1 digital camera maker, rose 50 yen, or 0.9 percent, to 5,720. Nissan Motor Co., Japan's second- largest automaker, added 2 yen, or 0.2 percent, to 1,307. Europe was the second-biggest overseas market for Nissan and the biggest for Canon last financial year.

Exporters gained yesterday after the euro climbed to a record intraday high of 149.74 against the yen, the strongest since the single currency's debut in January 1999. It recently traded at 148.88.

``A cheaper yen is an obvious plus for exporters and there's a move among investors to buy their shares,'' said Naoki Fujiwara, who oversees about $720 million at Shinkin Asset Management Co. in Tokyo. ``The big exporters are attracting some buying today.''

Fujiwara also said some investors are shifting their money into stocks that benefit from economic expansion including automakers by selling so-called defensive stocks that had risen rapidly and are least affected by fluctuations in growth.

KDDI Gains

T&D Holdings Inc., Japan's only publicly traded life insurer, retreated 120 yen, or 1.3 percent, to 9,060. The stock climbed 17 percent this year as of yesterday's close while the Topix slipped 0.6 percent in the same period.

Tokyo Electric Power Co., the country's largest utility company, lost 20 yen, or 0.6 percent, 3,220. Japan Tobacco Inc., the world's No. 3 cigarette maker, declined 8,000 yen, or 1.7 percent, to 453,000. Up to yesterday, Tokyo Electric had advanced 13 percent this year and Japan Tobacco had surged 31 percent.

Elsewhere, KDDI Corp., Japan's second-biggest phone company, added 4,000 yen, or 0.6 percent, to 728,000 after the Nihon Keizai newspaper said it will ally with JBC Co., the nation's No. 1 credit card company, to provide a pay-by-card service through mobile phones. Nippon Telegraph & Telephone Corp., which owns a 59 percent stake in KDDI rival NTT DoCoMo Inc., dropped 4,000 yen, or 0.7 percent, to 579,000.

Tokyo Gas Drops

Shimano Inc., a maker of bicycle parts and equipment for snowboarding and fishing, slumped 220 yen, or 6.2 percent, to 3,340, the worst performer in the MSCI World Index.

The company said its first-half net income dropped 31 percent. It also trimmed its full-year profit forecast by 9.1 percent and its planned full-year dividend to 31 yen from 35 yen.

Tokyo Gas Co., Japan's No. 1 natural gas distributor, fell 10 yen, or 1.6 percent, to 598. Credit Suisse Group cut its rating on the stock to ``neutral'' from ``outperform,'' saying the stock is reaching close to it's the brokerage's target price.

About 1.9 trillion yen ($16 billion) in shares included in the Topix traded, 14 percent less than the daily average for the past three months. Four shares gained for every three that fell on the Tokyo Stock Exchange's first section.

Nikkei futures expiring in September fell 0.1 percent to 16,170 in Osaka and were unchanged at 16,180 in Singapore.

Acom Co. (8572 JT)
Canon Inc. (7751 JT)
Japan Tobacco Inc. (2914 JT)
KDDI Corp. (9433 JT)
Nippon Telegraph & Telephone Corp. (9432 JT)
Nissan Motor Co. (7201 JT)
Orix Corp. (8591 JT)
Promise Co. (8574 JT)
Shimano Inc. (7309 JT)
T&D Holdings Inc. (8795 JT)
Tokyo Electric Power Co. (9501 JT)
Tokyo Gas Co. (9531 JT)

To contact the reporter for this story: Makiko Suzuki in Tokyo at msuzuki13@bloomberg.net.

Last Updated: August 23, 2006 02:58 EDT