June 26 (Bloomberg) -- Japanese exporter shares fell on lingering concern that losses tied to U.S. subprime mortgages will curb growth in the world's biggest economy. Komatsu Ltd. and Sony Corp. which rely on sales there, paced losses.

U.S. stocks declined for a second day yesterday on speculation hedge fund losses are greater than forecast and after a report showed sales of previously owned homes decreased in May.

``Investors have been taking their cue from the reaction in the U.S. market to estimate the influence of the subprime problem, which is still unclear,'' said Yoshihisa Okamoto, who helps oversee $1.9 billion in assets at Fuji Investment Management Co. in Tokyo. ``The decline in the past two days in the U.S. made people bearish about exporter shares.''

Limiting losses, property developers such as Mitsui Fudosan & Co. and utility companies including Tokyo Electric Power Co. gained as investors took advantage of recent declines.

The Nikkei 225 Stock Average fell 21.37, or 0.1 percent, to 18,066.11. The average dropped for a third day, the longest losing streak since March 5. The broader Topix index added 1.00, or 0.1 percent, to 1765.87, after slipping as much as 0.5 percent.

Stocks that fell outnumbered those that rose 834 to 748 on the Tokyo Stock Exchange's first section.

Komatsu, the world's second-biggest maker of earthmoving equipment, slid for a second day, losing 60 yen, or 1.7 percent, to 3,530. Sony, the No. 1 video-game maker globally, fell 60 yen, or 0.9 percent, to 6,400. Advantest Corp., the world's biggest maker of memory-chip testing equipment, declined 120 yen, or 2.2 percent, to 5,430.

Nissan Motor Co., Japan's third-biggest automaker by sales, dropped 12 yen, or 0.9 percent, to 1,320.

Impact Of Defaults?

The U.S. was the biggest overseas market for Komatsu and Sony last year and the fastest growing market for Advantest over the last two years. North America accounted for 43 percent of Nissan's total revenue in the 12 months ended March 31.

Bear Stearns Cos. slid to its lowest in nine months yesterday after Guy Moszkowski, an analyst at Merrill Lynch & Co., said the investment bank may have to salvage a second hedge fund that owes about $7 billion to its financiers.

The bank last week offered $3.2 billion in loans to bail out one of its hedge funds, which lost about 20 percent this year because of bad bets on collateralized-debt obligations.

After the close of trading, two people with knowledge of the situation said Bear Stearns may put up only $1.6 billion to rescue the first fund and the two people also said the second one now owes only about $1 billion.

Lured By Declines

Meanwhile, sales of previously owned homes in the U.S. fell in May to the lowest in almost four years, the National Association of Realtors said yesterday. The supply of unsold homes jumped to the highest in almost 15 years.

Property developers and power companies advanced as recent declines lured investors who aim to reap profits from a short- term rebound, Fuji Investment's Okamoto and Masahiko Nakatani at STB Asset Management Co. said.

Mitsui Fudosan, Japan's biggest property developer by sales, added 50 yen, or 1.5 percent, to 3,480 after sliding 6.8 percent in the last three sessions. Mitsubishi Estate Co., which dropped 7.5 percent in the same period, rose 30 yen, or 0.9 percent, to 3,360. Mitsubishi Estate is the second-largest developer. Tokyo Electric Power, Asia's biggest electricity producer, advanced 70 yen, or 1.8 percent, to 3,970. Tokyo Electric lost 1.8 percent in the last two days.

``What went down recently was bought today,'' said Nakatani, who helps oversee $12 billion in Tokyo. ``It was unreasonable to expect indexes to have a large gain as investors stuck to short- term rotational trading.''

Brokerage Alliance

Asahi Glass Co., Japan's largest glassmaker by sales, advanced 33 yen, or 2 percent, to 1,647. The Nikkei newspaper said the company plans to invest 15 billion yen ($121.4 million) to build a second plant in South Korea next summer to make glass substrates for liquid-crystal displays.

Toyama Chemical Co., which makes drugs to relieve shoulder and back pain, extended a 13 percent gain yesterday, rising 26 yen, or 3.1 percent, to 872. Toyama Chemical said yesterday Roche Holdings AG will pay $370 million for rights to its experimental rheumatoid arthritis treatment.

Matsui Securities Co., Japan's No. 2 online brokerage, jumped 22 yen, or 2 percent, to 1,124. The Nikkei reported Mitsubishi UFJ Financial Group Inc., the country's biggest bank by assets, is in talks to buy at least 15 percent of Matsui to create Japan's largest online brokerage alliance.

Hitachi Zosen Corp. dropped 4 yen, or 1.7 percent, to 238. The maker of incinerators was ordered by the government yesterday to suspend incinerator construction for almost a month after the company was charged with illegal bidding on a sewage- treatment project. The measure will have a ``small'' effect on earnings, the company said.

Nikkei futures expiring in September fell 0.1 percent to 18,090 in Osaka and lost 0.1 percent to 18,080 in Singapore.

Advantest Corp. (6857 JT)
Asahi Glass Co. (5201 JT)
Hitachi Zosen Corp. (7004 JT)
Komatsu Ltd. (6301 JT)
Matsui Securities Co. (8628 JT)
Mitsubishi Estate Co. (8802 JT)
Mitsui Fudosan Co. (8801 JT)
Nissan Motor Co. (7201 JT)
Sony Corp. (6758 JT)
Toyama Chemical Co. (4518 JT)

To contact the reporter for this story: Makiko Suzuki in Tokyo at Msuzuki13@bloomberg.net

Last Updated: June 26, 2007 03:09 EDT