The stock market in Japan fell sharply on Wednesday, taking cues from Wall Street where the major indices declined for the second consecutive day traders expressed some anxiety about the upcoming earning season and stocks' ability to sustain the recent upward move in light of expectations of weak quarterly results. Strengthening of the local currency below the 100-yen mark also dragged the market down.

On Tuesday, the Dow closed down 186.29 points or 2.3% at 7,790, while the Nasdaq closed down 45.10 points or 2.8% at 1,562 and the S&P 500 closed down 19.93 points or 2.4% at 816.

In Asian trading, crude oil ended lower by $1.15 at $48.00 a barrel in electronic trading. Light sweet crude for May delivery closed down $1.90 at $49.15 a barrel on the New York Mercantile Exchange on Tuesday amid demand concerns on signs of a deepening global economic downturn. Traders now look forward to the weekly inventory report from the U.S. Energy Information Administration or EIA, due out later in the day.

The benchmark Nikkei 225 Index declined 2.7% or 237.84 points to 8.595, and the broader Topix index of all First Section Issues fell 17.34 points, or 2.1%, to 815.

On the economic front, preliminary data released by the Ministry of Finance revealed that current account surplus for February slumped 55.6% to 1.117 trillion yen from the same period last year. The trade balance was 202.1 billion yen, down 80.4% on year as imports fell a record 44.9% and exports plummeted 50.4% - also a record. Analysts had expected a trade surplus of 142 billion yen following the 844.4 billion yen deficit in January.

Among the major exporters, Canon lost 5.48%, Sony fell 4.96% and Sharp is down 6.12%. Trading houses also ended weak. Mitsubishi Corp. slipped 1.77%, Sumitomo Corp. shed 2.92% and Itochu lost 3.40%.

Oil stocks declined on lower crude oil prices. Inpex declined 3.43%, Showa Shell lost 2.31%, and Nippon Oil fell 2.83%.

Among automakers, Honda Motor dropped 1.96% and Isuzu Motors slumped 11.27%. Toyota Motor however added 0.27%.

In the financials space, Mitsubishi UFJ dropped 3.75%, Sumitomo Mitsui lost 3.92% and Resona Holdings slipped 1.57%. Brokerage Nomura Holdings fell 1.38%. However, Mizuho Financial remained unchanged.

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