Market Report - Japan Economy Shrinks, Nikkei Falls

ANCHOR: Japan's economy contracted in the second quarter, reinforcing views the world No. 2 may have slipped into a recession after its longest period of growth since World War Two. Crumbling exports, weak domestic spending and declines in investment combined with high commodities prices to halt Japanese growth. The Nikkei fell in the wake of the 0.6% quarterly decline, with banks down most dramatically. Mitsubishi Financial Group declined after saying it would pay $3 billion to buy the remaining share of California's UnionBanCal Corp it does not own. Wall Street's slide over night left Asian investors scared, particularly for financial firms, while a further retreat in oil and gold prices did little to support regional markets, hitting miners and energy-linked firms hardest. Olympics sponsor Haier denied a report it would pay $7 billion jointly with the Blackstone Group for fellow sponsor GE's appliance business. The Chinese giant was named by GE in May as one of the firms looking to buy its business.