Moody's Investors Service said that it was putting Toyota's long-term debt, now rated triple-A, under review for a possible downgrade.

Several of the automakers' financial subsidiaries also were included in the review, which could affect securities worth 400 billion yen ($2.87 billion).

"Moody's action is based on the increasingly competitive environment in which the company operates and on the weakening of automobile demand in both the company's core market of Japan and in its export markets throughout south-east Asia," the ratings agency said in a statement.

Analysts strongly questioned the validity of the Moody'saction, however."I don't think it's warranted," Warburg Dillon Read analyst Peter Boardman said. "It's a country risk and not a company risk."He and otheranalysts said the United States generated more than three-fourths of Toyota's record-breaking profits during the last fiscal year, which ended on March 31.

Nikko Research Center analyst Noriyuki Matsushima was also sceptical about the Moody's review.

"It's inappropriate," he said. "Toyota can absorb a short-term fall in domestic earnings with earnings overseas... To cut its ratings solely on the basis of short-term earnings or Japanese domestic demand would be highly irregular."

A spokesman said Toyota had no comment on whether it thought the Moody's action was appropriate.

"Our company will continue to work for a strengthening of our financial base, and we would like to maintain our rating at triple-A," he said.

Toyota's reaction contrasted with the angry responses of several Japanese banks recently slapped with downgrades by Western ratings agencies.

Those actions have often dealt a brutal blow to already weakened Japanese financial institutions. A downgrade of Yamaichi Securities Co's debtcontributed significantly to the number-four Japanese brokerage's collapse last November.

Moody's acknowledged, however, that Toyota was still in good shape: "Given the company's consistent strength in (operating efficiency and financial liquidity)...it is likely that any adjustment to Toyota's rating will be modest and that it will remain well positioned."

Despite such strengths, in recent months Toyota has been forced to trim domestic output due to dull sales at home and in south-east Asia.

Warburg's Boardman also saw some potential downside from the Moody's review for Toyota's share price.

"It's more expensive than the rest of its competitors, and one reason is its blue-chip balance sheet," he said. The threat of a Moody's downgrade, Boardman said, could tarnish that balance sheet and make some investors hesitant to buy Toyota shares.

Toyota's shares ended Friday's trade at 3,590 yen, up 60 from the day before and up 160 from last week's finish.