TOKYO: Japan's Nikkei average fell 0.8 percent on Monday, the last full trading day of the year, but Mitsui Sumitomo Insurance Group Holdings jump ed on news it was in talks to merge with other non-life insurers. Market heavyweights Toyota Motor Corp fell 1 percent to 2,870 yen and Canon Inc shed 1.8 percent to 2,670 yen, giving back some of their recent gains and weighing on the market. Mitsui Sumitomo Insurance, Aioi Insurance Co and Nissay Dowa General Insurance Co are in talks to merge, a company source said, a move that would create Japan's largest non-life insurer. "The only trading factor is insurers. Investors liked the merger news as it sparked hopes of greater profitability and less competition in the sector," said Yoshinori Nagano, a chief strategist at Daiwa Asset Management. But he added that there were few people trading in the market except for those adjusting positions before the year-end. The Tokyo bourse will end the year with a half day of trading on Tuesday and reopen on Jan. 5. The benchmark Nikkei shed 69.58 points to 8,669.94 after rising 1.6 percent on Friday to hit its highest close in six weeks. The broader Topix dipped 0.3 percent to 844.31. "The market has factored in the notion that the economy will worsen in the immediate future, but it is finding it hard to make the next move because it is still unclear when the market will hit the bottom," said Kenichi Hirano, an operating officer at Tachibana Securities. "Recent consensus is that the economy won't recover until the year after next, and that is later than initially thought." Trade was light on the Tokyo exchange's first section, with 576 million shares changing hands, compared with last week's daily average of 597 million. Declining stocks and advancing ones were almost even at 742 to 735.

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