Japan's Nikkei drops 2.2 percent

Japanese stocks dropped on Thursday as selling spread across the board on renewed concern over the health of the U.S. financial sector.

The benchmark Nikkei 225 index lost 322.65 points, or 2.2 percent, to 14,130.17.

'Investors dumped shares on fresh worries over the U.S. financial sector,' said Kazuki Miyazawa, market analyst at Daiwa Securities SMBC Co. Ltd.

Sentiment was downbeat as Morgan Stanley on Wednesday reported a slightly better-than-expected fiscal second-quarter profit. Earnings at the second-largest U.S. investment bank were still down 61 percent from a year earlier on declining revenue, prompting investors to sell banking shares.

'Investors were worried financial woes would spread from top U.S. banks to local, regional banks,' Miyazawa said, adding Wednesday's tumble on Wall Street and uncertainty over volatile oil prices also pressured the Japanese market.

Among losers, financial giant Mizuho Financial Group Inc. dropped 3.7 percent to 549,000 yen and its rival Mitsubishi UFJ Financial Group. lost 3.6 percent to 1,038 yen.

Japan's top automaker Toyota Motor Corp. fell 3.2 percent to 5,490 yen and Honda Motor Co. was down 3.4 percent at 3,700 yen.

Sony Corp. declined 2.6 percent to 5,220 yen. Japan Airlines Corp. lost 0.9 percent to 227 yen after pilots of the country's largest carrier launched a strike Thursday, forcing the cancellation of 34 domestic flights.

The Topix index of all Tokyo Stock Exchange First Section issues dropped 34.04 points, or 2.4 percent, to 1,375.60.

In currency trading, the dollar stood at 107.59 yen mid-afternoon in Tokyo, down from 107.83 yen in New York late Wednesday.

The euro stood at $1.5562 mid-afternoon in Tokyo, little changed from $1.5546 in New York late Wednesday.

The greenback stood at 1.3683 Singapore dollars, and 33.00 Thai baht.