By Dominic Lau
TOKYO (Reuters) - Japan's Nikkei average fell 2 percent on Wednesday, breaking below the key 9,000 mark and hitting a two-week closing low, as a mass of companies went ex-dividend, while concerns over debt-laden Spain also dampened sentiment.
About 55 percent of Topix companies have passed the deadline for buyers of the stocks to be awarded rights to first-half dividends.
The Nikkei ended 184.84 points down to 8,906.70, breaking below its 25-day moving average at 8,983.84. The benchmark is down 1.1 percent this quarter, which ends this week.
Toyota Motor Corp <7203.T>, Nissan Motor Co and Honda Motor Co <7267.T> were among the companies trading ex-dividend, down between 2.6 and 4.9 percent.
A Toyota executive said the automaker was likely to slow production in China as anti-Japan sentiment there hurts sales, while Nissan said it would suspend car production at its Chinese joint venture from September 27, three days earlier than a scheduled holiday from September 30 to October 7.
A senior dealer at a foreign brokerage said the production halt should be positive for the carmakers as they could run down their excess inventories.
"The fact that these guys have a nice excuse to cut down production in China where they are running what could be argued as being slightly excessive inventory levels is good news to the companies," he said.
China-related companies have been taken a battering on concerns over faltering Chinese growth, while anti-Japanese sentiment in the country in response to a territorial dispute could add to their difficulties.
The Nikkei China 50, made up of Japanese firms with heavy exposure to the world's second-largest economy, shed 2.9 percent, taking its year-to-date loss to 2.4 percent.
For the year, the benchmark Nikkei is up 5.3 percent.
"We will have reporting season next month. The negative impact (of the anti-Japan sentiment) will appear on the earnings of auto and consumer-related companies," said Hisao Matsuura, equity strategist at Nomura Securities.
Still, share prices of China-exposed companies have factored in much of the bad news, meaning the risk of losses for them should be limited, he said.
Japanese auto and parts makers' one-month earnings momentum -- analysts' earnings upgrades minus downgrades as a total of estimates -- has deteriorated further to -8.2 percent from -5.2 percent last month, according to Thomson Reuters Datastream.
The pace of decline in Topix's earnings momentum, on the other hand, slowed to -6.7 percent from -9.1 percent in August.
SPUTTERING GLOBAL GROWTH
Construction machinery maker Komatsu Ltd <6301.T> and Hitachi Construction Machinery Co Ltd, whose fortunes are closely tied to China and global growth, eased 2.8 and 2.6 percent respectively. Their U.S. rival Caterpillar Inc, the world's largest earth-moving equipment maker, cut its 2015 earnings outlook on Monday.
Sluggish global growth, despite the U.S. Federal Reserve launching another round of stimulus moves, is biting into company earnings.
On Tuesday, German chipmaker Infineon Technologies said sales and profits would fall more than previously expected in forthcoming quarters.
The news weighed on Japanese semiconductor-related firms, with Advantest Corp <6857.T>, Tokyo Electron Ltd, Shinko Electric Industries Co Ltd <6967.T> and Dainippon Screen Manufacturing Co Ltd off between 3.7 and 5.1 percent.
The broader Topix index lost 2 percent to 742.54, with 1.46 billion shares changing hands, down from Tuesday's 1.75 billion and last week's average of 1.85 billion.
"European troubles are of course in focus, but relatively stable exchange rates are underpinning stocks. Some investors could also be buyers for window-dressing purposes as this is the last trading week of the quarter, but more of that buying might emerge later in the week," said Kenichi Hirano, operating officer at Tachibana Securities.
Protesters clashed with police in Spain's capital on Tuesday as the government prepared a new round of unpopular austerity measures for the 2013 budget to be announced on Thursday.
Spain is at the centre of the euro zone debt crisis on concerns the government cannot control its finances and those of highly-indebted regions, bitten by a second recession since 2009 that has put one in four workers out of work.
(Additional reporting by Lisa Twaronite; Editing by Daniel Magnowski)