Nikkei down 3 pct, hits 3-week low on Wall St, yen

(Updates to midmorning)

By Rika Otsuka

TOKYO, Nov 21 (Reuters) - Japan's Nikkei average fell more than 3 percent on Friday, striking a three-week low as a stronger yen, an overnight plunge in U.S. stocks and global recession fears prompted investors to sell exporters such as Sony Corp (6758.T).

Leasing and financial services company Orix Corp (8591.T) plunged 14.5 percent to 5,290 yen. Orix said on Thursday it would issue 150 billion yen ($1.6 billion) worth of convertible bonds, aiming to pay down short-term debt and raise investment funds. [ID:nT334044]

"A sharp slide in the New York market dragged down shares here," said Shinji Igarashi, an equity manager in the sales department at Chuo Securities. "Japanese stocks are at the mercy of external factors such as poor U.S. economic data and selling by overseas investors."

The benchmark Nikkei .N225 was 258.38 points or 3.4 percent at 7,444.66 after falling as low as 7,406.18, its lowest since late October. The Nikkei slid nearly 7 percent on Thursday.

The broader TOPIX index fell 3.3 percent to 756.12.

U.S. stocks plunged on Thursday as a frantic flight from risk prompted by investors' deepening fears about the economy drove the benchmark Standard & Poor's 500 index .SPX to its lowest level since 1997. [.N]

The yen dipped against the dollar on Friday but held near a three-week high hit beyond 94 yen the previous day as fears over the worldwide downturn sparked a wave of risk aversion. [FRX/]

The yen's firmness prompted investors to sell shares of exporters. Sony slipped 1.4 percent to 1,800 yen, and camera and office equipment maker Canon Inc (7751.T) was down 4.4 percent at 2,500 yen. (Editing by Michael Watson)