Nikkei falls more than 7 percent in early trade

TOKYO -- Japanese shares dropped more than 7 percent in early trade Thursday as jittery investors dumped stocks on growing worries over a slump in the global economy and weak corporate earnings.

The benchmark Nikkei 225 stock average plunged 658.08 points, or 7.59 percent, to 8,016.61 as of 9:55 am (0055 GMT) Thursday, extending further losses after the key index dropped almost 7 percent a day earlier.

Sentiment in Tokyo was also sluggish in line with a 5.69-percent loss on Wall Street Wednesday amid worries that the global economy is poised to weaken.

"Selling on Wall Street triggered yet another selling in Tokyo," said Kazuhiro Takahashi, equity strategist at Daiwa Securities SMBC Co. Ltd.

"Sentiment remained depressed as weak corporate earnings intensified worries over a slowdown in the global economy," Takahashi said.

In New York on Wednesday, market anxiety remained as hundreds of companies reported third-quarter results and issued murky forecasts this week, which stirred unease about bumps that could lay ahead for the U.S. economy.

Wachovia Corp., which is being bought by Wells Fargo & Co., reported that it swung to a huge loss in the third quarter, while drugmaker Merck & Co. said its quarterly profit fell 28 percent and that it would cut more than 10 percent of its work force.

Investors in Tokyo also traded with caution ahead of the release of Japanese corporate earnings later in the month. Key companies including Japanese electronics powerhouse NEC Corp. have downgraded their earnings estimates amid an economic downturn at home and abroad.

The broader Topix index also lost 6.09 percent to 835.05 in early trade.