Updated from 12:46 a.m. EDT

Asian stocks closed lower Thursday, but pared earlier losses, on concerns over the appreciation of the yen and weaker earnings reports.

Japan's Nikkei 225 stock average dropped 2.5% to 8460.98. Earlier in the session it dropped 7.6% to as low as 8016.61, a level last seen in May 2003.

The Hang Seng index in Hong Kong fell 4.7%, and the S&P/ASX 200 index in Australia fell 4.4%.

Shares of exporters such as automakers Mazda and Honda ( HMC) fell after the yen rallied against the euro. Sony ( SNE) slashed its earnings and profits forecast for the fiscal year on weaker sales of some of its products including LCD televisions.

Stocks in Europe were mixed after Nestle, the world's largest food company, raised its revenue forecasts.

The FTSE 100 index in London rose 0.5%, while the DAX in Frankfurt fell 0.6%.

Stock futures in the U.S. were indicating a higher open on Thursday. Futures for the S&P 500 rose 17.10 points to 919.90, and were 23.92 points above fair value. Nasdaq futures rose 15.25 points to 1263.25, and were 22.83 points above fair value.

Stocks on Wall Street got kicked hard Wednesday, as a spate of gloomy corporate earnings forecasts offered investors little hope of avoiding a painful global slowdown.

The three major indices spent the entire day in negative territory. A late-afternoon selloff sent them falling even further. The Dow Jones Industrial Average dropped 514.45 points, or 5.7%, to 8519.21, and the S&P 500 lost 58.26 points, or 6.1%, to 896.79. The Nasdaq fell 80.83 points, or 4.8%, to 1615.75. Every one of the stocks in the Dow registered a loss.

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