Asia markets fall; Nikkei drops 2 pct on Toyota's bad news

The benchmark Nikkei 225 index sank 2.1 percent to 13,655.3. Hong Kong's blue-chip Hang Seng Index fell 1.5 percent to 25,063.2, extending its losing streak to a third straight session.

In Tokyo, sentiment was downbeat throughout the day following Toyota Motor Corp.'s revelation Thursday that fourth-quarter profits dropped 28 percent, and that it expected profit this year to tumble 27 percent.

It would be the carmaker's first decline in annual earnings in seven years.

"Investors were spooked," said Tsuyoshi Segawa, an equity strategist at Shinko Securities Co. in Tokyo.

Toyota dropped 3.3 percent, and other Japanese automakers also got hit. Nissan Motor Co. fell 1.6 percent and Honda Motor Co. lost 3.9 percent.

Sony Corp. was also down, dropping 3.1 percent.

Internet and mobile phone provider Softbank Corp. fell 2.7 percent, even though it said Thursday that its net profit more than doubled in the fiscal fourth quarter.

In Hong Kong, investors dumped stocks in the real estate sector, spooked by losses in Chinese markets.

"Hong Kong shares are in lockstep with Chinese shares," said Francis Lun, general manager of Fulbright Securities.

The benchmark Shanghai Composite Index dropped 1.2 percent to 3,613.5 points. The Shenzhen Composite Index fell 0.5 percent to 1,097.4.

The Shanghai benchmark fell as much as 2.9 percent earlier in the day after the government reported that the producer price index, a key inflation indicator, rose 8.1 percent in April compared with the same month a year ago.

The rise in producer prices raised concerns that April consumer pricing data, due Monday, will show a persistently high rate of inflation. That could prompt Beijing to tighten its monetary policy further.

Among losers in Hong Kong, property firm Sino Land plunged 4.3 percent, and Hang Lung Properties dropped 3.1 percent.

In Shanghai, financial and property shares, those most acutely affected by monetary policy, led the decline.

Industrial & Commercial Bank of China fell 2.7 percent, China Merchants Bank slipped 1.7 percent and property leader China Vanke shed 1.1 percent.

Shares in Asian airlines were also under pressure as investors worried record high global oil prices could affect carriers' operation costs and earnings.

Japan Airlines in its earnings report said Friday that it had reduced losses in the January-March quarter from the same period last year on cost cuts, but it forecast more meager profits ahead, blaming soaring fuel costs.

Hong Kong airline Cathay Pacific sank 4.2 percent, while Japan Airlines fell 1.6 percent in Tokyo.

Elsewhere in Asia, major stock benchmarks fell in India, Indonesia, New Zealand, Singapore, South Korea, Taiwan and Thailand. Benchmarks in Australia, Malaysia and the Philippines bucked the regional downtrend to close higher.