Aug. 24 (Bloomberg) -- Japanese stocks fell after the chief executive of the largest U.S. mortgage lender said the nation's housing slump may lead to recession in the world's largest economy.

Investors took advantage of this week's surge by stocks such as Mitsubishi Corp. and Hoya Corp. to sell on concern shares worldwide will resume their slide.

``If company managers say the economy will slow, then it will,'' said Katsunori Hirai, who helps oversee around $29 billion in assets at Tokio Marine Asset Management Co. in Tokyo. ``I trust what they are sensing from every-day operations more than macro economic data which hasn't shown significant evidence of a recession.''

Limiting losses, Nippon Yusen K.K. advanced after Mizuho Securities Co. raised its rating on Japan's three biggest shipping lines. Canon Inc. climbed after saying it will buy back 1.7 percent of its total outstanding shares.

The Nikkei 225 Stock Average fell 67.35, or 0.4 percent, to 16,248.97. The broader Topix index lost 5.96, or 0.4 percent, to 1,585.85.

Mitsubishi Corp., Japan's largest trading company, lost 40 yen, or 1.3 percent, to 3,070. The stock surged 18 percent this week to yesterday. Hoya, the nation's biggest maker of optical glass, fell 140 yen, or 3.4 percent, to 3,930 after climbing 11 percent in the four days to yesterday. Orix Corp., which advanced 8.7 percent for the same period, slid 1,170 yen, or 4.5 percent, to 24,600.

`Far From Over'

Honda Motor Co., which made more than half of its sales in North America last year, lost 20 yen, or 0.5 percent, to 3,700, trimming a 7.2 percent advance it had in the first four days of this week.

``We can no longer expect moderate growth in the U.S. as we used to forecast,'' said Hideo Arimura, who helps oversee $26 billion at Mizuho Asset Management Co. in Tokyo. ``The crisis is far from over and you need to keep your portfolio away from the risk of a further slide in markets.''

The Standard & Poor's 500 Index lost 0.1 percent in the U.S. after Countrywide Financial Corp. Chief Executive Angelo Mozilo said in an interview with CNBC television network he believes the world's biggest economy may be heading for a recession.

Countrywide received $2 billion investment from Bank of America Corp. on Aug. 22, erasing concern the mortgage lender will go bankrupt.

`Concern Deepened'

Wal-Mart Stores Inc. and Home Depot Inc., the two largest U.S. retailers, said on Aug. 14 the housing slump and rising mortgage defaults will depress their earnings for the year.

Concern about a widening credit crisis, sparked by rising defaults on U.S. home loans resulted in the worldwide sell-off last week, erasing more than $5.5 trillion of market value.

``From sometime around February, I was worried about the impact of falling housing prices on purchases of cars and other products,'' said Tokio Marine Asset's Hirai. ``That concern deepened after Wal-Mart's announcement.''

A measure tracking shipping lines jumped 1.3 percent, the best performer among the 33 industry groups in the Topix.

Nippon Yusen, Japan's biggest, climbed 20 yen, or 1.8 percent, to 1,116. Mitsui O.S.K. Lines Ltd., the nation's second largest, rose 17 yen, or 1.1 percent, to 1,619 and Kawasaki Kisen Kaisha Ltd., the third-biggest, added 18 yen, or 1.2 percent, to 1,469.

Mizuho raised its ratings on Nippon Yusen and Mitsui O.S.K. to ``buy'' from ``hold,'' citing outlook for strong profit growth, and lifted its recommendation on Kawasaki Kisen to ``hold'' from ``reduce.''

Canon, Hino Motors

Canon advanced 230 yen, or 3.7 percent, to 6,490 after the world's largest digital camera maker said it will spend as much as 100 billion yen ($859.8 million) to repurchase up to 23 million shares from today through Sept. 25.

Nikon Corp., the world's No. 2 maker of single-lens reflex cameras, rose 90 yen, or 2.7 percent, to 3,370 after saying the company expects sales at its camera division to increase 8 percent to 550 billion yen in the year ending March 2010. Deutsche Bank AG. raised its rating on the stock to ``buy'' from hold.''

Hino Motors Ltd. jumped 25 yen, or 3.3 percent, to 782 and Isuzu Motors Ltd. gained 11 yen, or 2 percent, to 565. The two companies, both affiliates of Toyota Motor Corp., will jointly develop diesel engines that comply with stricter emissions guidelines, the Nikkei newspaper reported, without saying where it got the information.

Hino spokesman Yoshihiro Udagawa and Isuzu spokesman Naoki Ariizumi both denied the report.

Nikkei futures expiring in September lost 0.7 percent to 16,240 in Osaka and declined 1.3 percent to 16,200 in Singapore.

The Nikkei climbed 6.4 percent this week, the largest weekly gain since Oct. 18, 2002, and the Topix jumped 7.1 percent, its biggest advance since March 8, 2002.

Canon Inc. (7751 JT)
Hino Motors Ltd. (7205 JT)
Honda Motor Co. (7267 JT)
Hoya Corp. (7741 JT)
Isuzu Motors Ltd. (7202 JT)
Kawasaki Kisen Kaisha Ltd. (9107 JT)
Mitsubishi Corp. (8058 JT)
Mitsui O.S.K. Lines Ltd. (9104 JT)
Nikon Corp. (7731 JT)
Nippon Yusen K.K. (9101 JT)
Orix Corp. (8591 JT)

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

Last Updated: August 24, 2007 02:43 EDT