Japan's Nikkei average fell 0.8 per cent on Monday, after booking a four-month closing

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low the previous trading day, hurt by automakers

such as Honda Motor amid worries about the fate of General Motors.

If the benchmark were to end at its current level of 7,115.19, it would be the lowest close in about 26 years, though market participants have said buying by what they believe to be public pension funds has been supporting when it approaches 7,000.

Shares of Takeda Pharmaceutical Co, Japan's largest drugmaker, were hit by a glut of sell orders, after the US Food and Drug Administration asked for more data to complete a review of a key diabetes drug candidate. Indicated prices showed it down by its daily limit.

But higher oil prices helped buoy energy-linked shares such as oil and gas field developer Inpex.

"Worries about the financial system haven't gone away. Some hedge funds seem to have been shifting money to assets such as gold from equities," said Hiroaki Kuramochi, chief equity marketing officer at Tokai Tokyo Securities.

Investors were keen to see the outcome of a meeting between the US auto task force, GM, Chrysler and officials from the United Auto Workers in Detroit this week after auditors raised doubts about GM's ability to survive outside bankruptcy.

"It's hard to pick up automakers as nobody really knows what is going to happen with GM and as nothing concrete had been unveiled," Kuramochi said.

The benchmark Nikkei shed 57.91 points in light trade to 7,115.19, after opening higher. If it closes the day below 7,162.90 hit on Oct. 27, it would book its lowest finish in about 26 years.

The broader Topix slipped 1.4 per cent to 711.17. The Dow Jones industrial average rose 0.5 per cent on Friday, even after a government report showing the US unemployment rate rose last month to 8.1 per cent, its highest since December 1983, as 651,000 jobs were cut.

Automakers fell as Honda Motor shed 3.3 per cent to 2,080 yen and Toyota Motor Corp slid 2.4 per cent to 2,830 yen.

Other exporters also declined on the gloomy US jobs data. Canon Inc slipped 1.4 per cent to 2,160 yen.

Takeda shares were awash with sell orders at 3,320 yen, down 13.1 per cent from Friday's close.

Worries about the fragile health of the US financial sector and that some banks may be nationalised, weighed on Japanese banks.

Mitsubishi UFJ Financial Group, the top lender, lost 3.5 per cent to 387 yen and No.2 Mizuho Financial Group retreated 2.8 per cent to 171 yen.

Shares of Shinsei Bank, a struggling midsize Japanese lender, tumbled 7.5 per cent to 74 yen after the bank said on Friday it would issue an unspecified amount of preferred securities to shore up its capital base.

Among gainers, Inpex climbed 3.7 per cent to 643,000 yen after oil rose over 2 per cent to near $47 a barrel on Monday, extending the previous session's gains of over 4 per cent amid optimism that OPEC would cut output again at this month's meeting.

Showa Shell Sekiyu, a major oil distributor, gained 3.3 per cent to 814 yen, while fellow distributor Nippon Oil advanced 2.5 per cent to 455 yen.

Trade was light on the Tokyo exchange's first section, with 715 million shares changing hands, below last week's morning average of 946 million.

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