Nov. 16 (Bloomberg) -- Japanese stocks fell, led by Toyota Motor Corp. and Mizuho Financial Group Inc., after the yen rose against the dollar and Wells Fargo & Co. said the U.S. housing market is the worst since the Great Depression.

Toyota, second in U.S. auto sales this year, slid 1.8 percent and was the third-most actively traded stock by value. Nintendo Co., which gets two-thirds of its revenue overseas, and Mizuho, Japan's second-largest bank, had the biggest declines in a week.

``Concerns are spreading about widening losses at financial institutions because of the subprime loan problem, but the real issue is whether personal consumption in the U.S. will be affected,'' said Naoto Komoro, who helps look after about $18 billion in assets at Northern Trust Global Investments in Tokyo. ``There are concerns that the yen may strengthen further, which would affect earnings from next year.''

The Nikkei 225 Stock Average slid 241.69, or 1.6 percent, to 15,154.61 at the close of trading in Tokyo. The measure has fallen 9.5 percent this month, dropping on all but two days. The broader Topix index lost 27.19, or 1.8 percent to 1,471.67. Electronics makers and automakers accounted for 23 percent of the decline.

Toyota declined 110 yen, or 1.8 percent, to 6,110 with 53.72 billion yen ($488 million) in shares changing hands. The carmaker expects an industrywide slowdown in demand to continue into 2008 because of a housing slump and rising gasoline prices, said Jim Lentz, president of Toyota's U.S. sales unit.

Further Declines

Wells Fargo, the second-largest U.S. mortgage lender, said yesterday home-equity losses will remain ``elevated'' through 2008. Adding to concerns, Fannie Mae tumbled to a two-year low after Fortune said the biggest source of money for U.S. mortgages changed the way it accounts for bad loans.

J.C. Penney Co., the third-largest U.S. department store chain, said profit declined for the first time in three quarters as sales fell.

``A slowdown in spending is expected to have an effect on earnings from next year,'' said Northern Trust's Komoro. ``Japanese stocks, which are relatively dependent on the U.S., may experience another round of declines.''

Canon Inc., the world's largest maker of digital cameras, fell 70 yen, or 1.3 percent, to 5,500. Sony Corp., the world's second-biggest consumer electronics maker, lost 60 yen, or 1.1 percent, to 5,350.

The yen recently strengthened to 110.15 to the dollar from 111.26 at the close of the Tokyo Stock Exchange yesterday. A stronger Japanese currency decreases the value of companies' overseas earnings when translated into yen.

Moody's Mizuho Call

``People are worried that exporters may see their earnings suffer next year'' as the yen strengthens, said Fujio Ando, who helps oversee about $1 billion in Asian equities as managing director at Chibagin Asset Management Co. in Tokyo.

Nintendo slid 2,300 yen, or 3.6 percent, to 61,000 in Osaka. The company, the world's biggest maker of handheld game players, derives two-thirds of its revenue from outside Japan.

The stock fell even as figures from NPD Group Inc., a Port Washington, New York-based researcher, showed the company's Wii regained the lead in U.S. video-game console sales in October, fending off price cuts by Sony and Microsoft Corp.

Shares also fell after Bank of Japan Deputy Governor Toshiro Muto said the U.S. housing recession and financial- market turmoil could hurt Japan's economy.

Muto said in a Bloomberg interview published today that policy makers ``are fully aware'' growth in Japan would be threatened should the U.S. slowdown infect the rest of the world.

Banks accounted for 8.8 percent of the Topix's decline.

Haseko, Mitsubishi Heavy

Mizuho, Japan's second-largest publicly traded lender, sank 14,000 yen, or 2.6 percent, to 532,000. Moody's Investors Service cut the financial strength outlook of Mizuho's banking units to ``negative'' from ``stable'' yesterday after the market closed, citing losses related to U.S. subprime loans.

Mizuho this week said net income declined 17 percent in the six months ended Sept. 30 as it lost about 70 billion yen on investments in the U.S. mortgage market.

Among other lenders, Mitsubishi UFJ Financial Group Inc., Japan's largest publicly traded bank, lost 28 yen, or 2.9 percent, to 934. Sumitomo Mitsui Financial Group Inc., the third biggest, fell 15,000 yen, or 1.9 percent, to 787,000.

Credit Saison Co., a consumer credit company, fell 60 yen, or 1.9 percent, to 3,030 after cutting its full-year net income forecast 12 percent

Haseko Corp. slid 14 yen, or 6.3 percent, to 210, the biggest decline since Sept. 18. First-half net income at the company, a general contractor, tumbled 60 percent because of a 26.4 billion yen charge from a drop in inventory assets. Haseko cut its full-year profit forecast by 23 percent.

Mitsubishi Heavy Industries Ltd., Asia's largest maker of power equipment, fell 33 yen, or 6 percent, to 522, dropping the most since Aug. 17. The company said some of its construction operations will be suspended for 45 days from Nov. 30 for bid- rigging in a local bridge-building project.

Nikkei futures expiring in December dropped 1.3 percent to 15,190 in Osaka and slid 1.2 percent to 15,200 in Singapore. The Nikkei fell 2.8 percent this week, while the Topix lost 1.5 percent.

Canon Inc. (7751 JT)
Credit Saison Co. (8253 JT)
Haseko Corp. (1808 JT)
Mitsubishi Heavy Industries Ltd. (7011 JT)
Mitsubishi UFJ Financial Group Inc. (8306 JT)
Mizuho Financial Group Inc. (8411 JT)
Nintendo Co. (7974 JO)
Sony Corp. (6758 JT)
Sumitomo Mitsui Financial Group Inc. (8316 JT)
Toyota Motor Corp. (7203 JT)

To contact the reporter on this story: Tomoko Yamazaki in Tokyo at tyamazaki@bloomberg.net; Kotaro Tsunetomi in Tokyo at ktsunetomi@bloomberg.net

Last Updated: November 16, 2007 01:52 EST