Japanese stocks slid more than 1 percent on Thursday, dragged down by worse-than-expected industrial output figures and a stronger yen that hit Honda Motor Corp and other exporters, Reuters reported. Industrial output fell 2.0 percent in January from a month earlier, government data showed, more than twice the median market forecast for a 0.8 percent decline. But market players said shares didn't fall as much as might be expected from the line-up of negative factors, with investors seeming to take heart from hopes of further Federal Reserve interest rate cuts after comments from Fed Chairman Ben Bernanke on Wednesday. A report that the Japanese government has decided not to seek limits on foreign ownership of airports this year also helped bolster the market. The transport ministry had been preparing to submit to the current Diet session a bill including a clause limiting foreign stake in airports to less than a third of voting shares, but the Nikkei business daily reported that the bill has been shelved. Japan Airport Terminal Co, which runs Tokyo's Haneda Airport, was up 4.4 percent after the Nikkei report. "Japanese stocks have suffered in the past from perceptions that Japan was a 'closed country,' so this is fundamentally positive," said Takeshi Osawa, senior fund manager at Norinchukin Zenkyoren Asset Management. "There's also expectations of U.S. fiscal policy, and that's providing some support too." Bernanke signalled further rate cuts to avert a recession, making clear that the U.S. central bank was more worried about the risks to growth than inflation. The benchmark Nikkei dropped 1.5 percent to 13,823.24 by midsession, shedding 208 points. The broader TOPIX lost 1.5 percent to 1,343.47. The slide was partly due to investors locking in profits from this week's gains, with issues that had risen sharply suffering some of the bigger falls. YEN ADVANCE The stock market was warily watching moves in the currency market for any yen gains that could further hurt shares of exporters. The yen edged up slightly against the dollar and has jumped since the start of the week, climbing through 106 yen on Wednesday to be back near a three-year peak hit in January. The dollar was fetching 106.36 yen down slightly from the 106.50 yen marked in late U.S. trade.