Japan's Magara files for rehabilitation - Kyodo

TOKYO, July 5 (Reuters) - Japan's Magara Construction 1839.T said on Saturday it had filed for corporate rehabilitation proceedings with debts totalling about 35 billion yen ($327 million), Kyodo news agency reported.

Such a filing follows the bankruptcy of real estate developer Suruga Cop 1880.T in late June, highlighting the troubles of Japan's struggling property and construction industries.

Shares of Japanese property and construction firms have suffered heavy selling on investor fears about their health as companies cope with stricter earthquake safety rules introduced a year ago, tighter lending conditions and a slowing economy.

Japanese housing starts have fallen for 11 straight months since the new rules were introduced, while construction orders have also tumbled.

The Tokyo stock exchange's subindexes of real estate .IRLTY.T and construction .ICNST.T stocks have fallen nearly 50 percent from a high hit in May last year, compared with a 25 percent decline in the benchmark Nikkei share average .N225 over the same period. [ID:nT328408]

Since the Suruga default, Magara's shares fell as much as 24 percent to a low of 38 yen, the lowest in at least 24 years.

(Reporting by Eric Burroughs, Editing by Peter Blackburn)