Japan's Nikkei average fell 0.87 percent on Monday as exporters such as Canon Inc. lost ground on a tumble on Wall Street and a stronger yen, while bank shares slid again on subprime lending worries and much weaker first-quarter earnings than expected.

But shares of Toyota Motor Corp. rose nearly 2 percent, helping support the market after the world's biggest and most profitable automaker said on Friday its quarterly operating profit rose by a better-than-expected 32 percent.

There's nothing we can do after the Dow had such a huge drop. Still, if the Nikkei can manage to keep above last week's lowest point, the market will be still all right, said Katsuhiko Kodama, senior strategist at Toyo Securities.

The benchmark logged last week's low on Thursday at 16,652.80.

Stocks here will likely continue falling unless the New York market regains composure, Kodama said, adding that the stronger yen was also weighing on the market.

The Nikkei ended the morning session down 148.16 points at 16,831.70. The benchmark has lost 8 percent since it booked its highest for the year at 18,300.39 on Feb. 26.

The broader TOPIX index shed 0.87 percent to 1,658.00.

On Friday, the Dow Jones industrial average tumbled 2.09 percent amid credit worries.

The dollar pared some of its losses to stand at 117.43 yen, down about 0.5 percent from late U.S. trading on Friday.

Yumi Nishimura, manager of the investment advisory section at Daiwa Securities SMBC Co Ltd., said despite the Nikkei's fall some investors remain keen to pick up stocks.

Investors are picking up stocks that are cheap and have good profit prospects. It's not like investors completely shunned the market.

Volume was moderate with 942 million shares changing hands, compared with last week's morning average of 997 million shares. Turnover stood at 1.45 trillion yen ($12.32 billion), reflecting active trade.

Declining shares outnumbered advancers by about two to one.

After the morning close, Japan Airlines Corp. (JAL) posted a narrower first-quarter loss, helped by brisk demand on international routes and efforts to trim its payroll.

BANKS EXTEND LOSSES

Shares of Mizuho Financial Group fell 4.2 percent to 690,000 yen, and since last Tuesday's close has slid 18 percent.

Mitsubishi UFJ Financial Group fell 3.4 percent to 1.15 million yen, making for a 9.4 percent tumble since Tuesday while Sumitomo Mitsui Financial Group. was 3.8 percent lower at 961,000 and down 11 percent since Tuesday.

Financial stocks including those of brokerage firms are being sold following drops in their U.S. peers, said Nishimura. She said recent bearishness in stock markets had triggered concern that brokers might be affected.

Shares of exporters fell, with Canon down 3.2 percent at 6,310 yen, while Sony Corp. lost 3 percent to 5,930 yen.

Shares of Toyota climbed 1.7 percent to 7,200 yen.

Elsewhere, Fast Retailing Co. Ltd. retreated 2.5 percent to 6,550 yen after raising its bid for Barneys New York Inc. to $950 million on Sunday, topping the sweetened offer Dubai government-owned Istithmar announced earlier in the day.

Gas and oil developer Inpex Holdings Inc. plunged 5 percent to 1.14 million yen after U.S. crude oil futures ended more than a dollar lower on Friday as weak economic data pressured Wall Street, sparking worries in energy markets that petroleum demand might drop.

Japan Nikkei 225