(RTTNews) - The Japanese stock market is trading notably lower on Monday with investors indulging in some heavy selling at several front line counters on negative cues from Wall Street, where stocks had declined on Friday on disappointing earnings reports.

The benchmark Nikkei 225 index, which fell to 10,125.3, is currently trading at 10,142, down 115.6 points, or 1.13%, from its previous close.

Automobile stocks are mostly trading in the red. Honda Motor, Toyota Motor, Nissan Motor and Suzuki Motor are trading lower by 1%-3%.

Among bank stocks, Sumitomo Mitsui Financial, Resona Holdings, Bank of Yokohama, Mitsui UFJ Financial and Mizuho Financial are trading notably lower.

Shares of trading houses and securities firms are also seen struggling for support. Food, chemicals and pharmaceuticals stocks are exhibiting a mixed trend. Steel, non-ferrous metals, machinery and electric machinery stocks are mostly down in the red.

After suffering heavy losses in recent sessions, the Japan Airlines stock has rallied sharply on Monday with investors going in for some bargain hunting at the counter. Reports that the government is considering rebuilding the airliner under the aegis of Enterprise Turnaround Initiative Corp. of Japan, appear to be aiding the rally in early trades. The stock is trading over 10% up at 112 yen.
Shares of Kyoei Steel Ltd., are down sharply following the company canceling the merger with Tokyo Tekko Co. Kyoei Steel is trading 6% down, while Tokyo Tekko is declining by about 5%.

On the economic front, the Japanese government is trying to make the size of Japan's general-account budget for fiscal 2010 no more than 92 trillion yen, Finance Minister Hirohisa Fujii said Monday.

Fujii told reporters in Tokyo that the government will stick to its policy of issuing no more than 44 trillion yen worth of debt-covering bonds to fund the budget for the year starting in April, despite a sharp fall in tax revenue due to the recession. Last week, the amount of budgetary requests submitted by government ministries and agencies to the Finance ministry for fiscal 2010 reached an all-time high of 95.04 trillion yen.

At a meeting of Bank of Japan branch office managers, Governor Masaaki Shirakawa said the economy is gathering steam and, despite lingering harshness, is seeing signs of improvement in corporate financing. He also said the economy "is likely to start recovering" and continue to grow down the road.

In the currency market, the U.S. dollar traded in the upper 90 yen zone early Monday in Tokyo, little changed from Friday's levels. In early trades, the dollar fetched fetched 90.89-90.91 yen against Friday's close of 90.87-90.97 yen in New York and 91.16-91.18 yen in Tokyo. The yen is currently trading 90.84 to the U.S. dollar.

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