Sept. 7 (Bloomberg) -- Japanese stocks declined after U.S. home foreclosures rose to a record and the European Central Bank lent emergency cash to banks.

Lenders including Mizuho Financial Group Inc. and exporters such as Canon Inc. dropped on concern the global financial- market turmoil is not over yet. Exporters also fell on speculation the yen will remain near its highest level of 2007, curbing their earnings.

Commodity-related shares such as Inpex Holdings Inc. advanced after prices of crude oil and metals jumped.

``Investors can't afford to take a risk until the outlook for the subprime problem and the yen's move becomes more clear,'' said Koji Uchida, who helps look after $61 billion at Mitsubishi UFJ Financial Group Inc. in Tokyo. ``Commodity- related stocks are attractive because demand for resources will continue to be strong.''

The Nikkei 225 Stock Average dropped 134.84, or 0.8 percent, to 16,122.16. The broader Topix index slid 11.50, or 0.7 percent, to 1,557.02. The index fell for a fifth consecutive day, the longest losing streak since a five-day decline ended March 5.

A measure tracking banks accounted for around one third of the Topix's fall.

Nippon Steel Corp. led losses by makers of the alloy after investors judged its increased earnings forecast wasn't good enough to keep on pushing shares higher.

Mizuho Financial, Japan's second-biggest bank by assets, retreated 24,000 yen, or 3.4 percent, to 678,000 and was the most actively traded stock by value with 64.1 billion yen ($557 million) in shares changing hands. Sumitomo Mitsui Financial Group Inc., the nation's third largest, dropped 26,000 yen, or 3 percent, to 846,000.

Foreclosures

Canon, the world's No. 1 digital camera maker, fell 150 yen, or 2.3 percent, to 6,280. Nintendo Co., the leading supplier of video-game consoles in the U.S., lost 800 yen, or 1.5 percent, to 52,900 in Osaka.

Lenders began the process of seizing properties on 0.65 percent of U.S. mortgages in the second quarter, an all-time high, the Mortgage Bankers Association said yesterday. In the first quarter, that figure was 0.58 percent. The percentage of subprime, or higher risk, borrowers making late payments increased to 14.82 from 13.77 percent.

More Cash Provided

The ECB left its key interest rate unchanged yesterday after pumping 42.2 billion euros ($57.7 billion) into money markets, providing emergency cash to reduce borrowing costs that reached their highest in six years. ECB President Jean-Claude Trichet said more funds will be provided.

The U.S. Federal Reserve added $31.25 billion to the U.S. banking system yesterday, the most in almost a month.

Investors also sold exporter stocks on concern the yen will sustain its strengthening trend. The Japanese currency has weakened by only 1.1 percent in the last three weeks after climbing 8.1 percent between June 22 and Aug. 16 to 113.91, the highest close this year. It traded at 115.09 a dollar as of the 3 p.m. close of the stock market.

``The subprime problem is still the largest concern for investors, together with the strengthened yen which increases possibility exporters will report profit declines in the second half of this fiscal year,'' said Fumiyuki Nakanishi, strategist at SMBC Friend Securities Co. in Tokyo.

Inpex, Japan's largest oil explorer, added 20,000 yen, or 1.9 percent, to 1.07 million. Its smaller rival Japan Petroleum Exploration Co. climbed 480 yen, or 6.5 percent, to 7,880. Sumitomo Metal Mining Co., Japan's biggest gold producer, advanced 50 yen, or 2.2 percent, to 2,340.

A measure of mining stocks in the Topix including Inpex rose 2.3 percent, the best performance among the 33 industry groups in the benchmark.

`No Surprise'

Crude oil for October delivery rose 0.8 percent, to settle at $76.30 a barrel in New York, the highest close since Aug. 2. Copper futures for delivery in December gained 1.2 percent and the December contract for gold jumped 2 percent in New York.

Nippon Steel Corp., Asia's biggest maker of the alloy, dropped 25 yen, or 3.1 percent, to 789. The stock rose 1.8 percent yesterday after the company lifted its annual net income forecast by 3.9 percent to 365 billion yen for the year to March 2008. The average analysts' estimate compiled by Bloomberg was 370 billion yen.

``Investors bought the stock yesterday on the increased earnings forecast but if you look at details, you realize there was no surprise,'' said Yasuhiko Hirakawa, who helps manage the equivalent of $80 billion at DLIBJ Asset Management Co. in Tokyo.

Mitsubishi UFJ Nicos Co., a credit card company, jumped 13 yen, or 4.5 percent, to 304 on speculation Mitsubishi UFJ Financial Group Inc. will offer a premium in a stock swap to buy out minority shareholders. Mitsubishi UFJ Financial owns 65 percent of Nicos.

The bank will soon begin negotiating to buy out minority shareholders, Nikkei English News said, without saying where it got the information.

Nikkei futures expiring in September lost 0.9 percent to 16,100 in Osaka and fell 0.8 percent to 16,110 in Singapore.

The Nikkei declined 2.7 percent for the week while the Topix dropped 3.2 percent.

Canon Inc. (7751 JT)
Inpex Holdings Inc. (1605 JT)
Japan Petroleum Exploration Co. (1662 JT)
Mitsubishi UFJ Nicos Co. (8583 JT)
Mizuho Financial Group Inc. (8411 JT)
Nintendo Co. (7974 JO)
Nippon Steel Corp. (5401 JT)
Sumitomo Metal Mining Co. (5713 JT)
Sumitomo Mitsui Financial Group Inc. (8316 JT)

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

Last Updated: September 7, 2007 02:52 EDT