Japan stocks fall amid US bank rescue plan doubts

The benchmark Nikkei 225 index fell 149.55 points, or 1.26 percent, to 11,743.61 after spending the morning in positive territory. The broader Topix index fell 1.74 percent to 1,127.87.

After days of intense talks, the White House and Congressional leaders agreed Sunday to the $700 billion public bailout of the ailing financial industry after lawmakers insisted on sharing spending controls with the administration of President George W. Bush.

The biggest U.S. bailout in history, which goes to the House for a vote Monday, would give the administration broad power to use taxpayers' money to purchase billions of home mortgage-related assets held by cash-starved financial firms.

Takahiko Murai, equities general manager at Nozomi Securities in Tokyo, said investors are questioning the effectiveness and details of the plan, including the government's ultimate purchasing price of the bad assets.

"If it passes as expected, the focus will begin to shift to the real economy," Murai said.

Marine transport names led declines after a key shipping index plunged 10 percent Friday amid slowing global trade and a recent drop-off in iron ore demand in China. The Baltic Dry Index, which measures drybulk shipping rates on 40 routes across the world, fell 417 points to close at 3,746--marking one of its biggest one-day declines.

Mitsui O.S.K. Lines Ltd., the world's largest cargo shipper, slumped 6.03 percent to 889 yen, and Nippon Yusen K.K. shed 6.58 percent to 681 yen.

Automakers veered south after the Nikkei financial daily reported that Toyota Motor Corp. and Mazda Motor Corp. were cutting production in China due to weaker demand. Toyota closed down 3.16 percent at 4,590 yen, and Mazda plunged 7.91 percent to 419 yen.

Japanese banks ended mixed after holding firm in the morning. Mitsubishi UFJ Financial Group Inc. edged up 0.64 percent to 937 yen, while Mizuho Financial Group Inc. slipped 1.50 percent to 461,000 yen.