Facing political pressure in Washington and potentially embarrassing publicity at home, a Japanese company yesterday withdrew a bid for a 40 percent stake in a Connecticut machine tool firm whose products are believed to help build U.S. nuclear weapons.

Fanuc Ltd. said it canceled a $10 million investment agreement with Moore Special Tool Co., a small, family-owned concern that has been seeking a capital infusion. Fanuc cited delays in securing U.S. government approval and uncertainties over U.S. laws that govern foreign purchases of this sort.

Employing about 250 people, Moore makes precision machine tools that have widespread use in civilian industry. But about 10 percent of the company's annual sales of less than $50 million are to the Energy Department, which handles production of the U.S. nuclear arsenal. Some of the machines are installed in classified department facilities.

Congressional critics seized on the deal as a demonstration of faults in the Bush administration's generally open policy toward foreign investment. They argue that the government should regulate acquisitions more closely or risk losing control of crucial industries to foreign competitors.

Moore, believed to be the last U.S.-owned company that makes certain machine tools used in the weapons production, should remain in U.S. hands to safeguard national security, they said.

"It's a sad day when decisions critical to American security are left to overseas boards" of directors, said Rep. Mel Levine (D-Calif.). "We should have stopped this sale long before Fanuc backed out." Levine said he believed that American companies would now "step up to bat" to buy into Moore.

Congressional attacks always raise concern in Japan, but as the only country ever to have suffered nuclear attack, the Moore deal had special domestic implications as well. Japan maintains a strict policy against acquiring nuclear weapons and generally does not allow its companies to export weapons.

Some U.S. critics thought a good hope of canceling the deal would be to draw attention to the nuclear angle in Japan and suggest that a Japanese company was getting involved in nuclear weapons production. Some Japanese officials, however, argue that since the technology was "dual-use," this would not be a concern. The nuclear angle has not in fact become a major issue in Japan.

The federal government's Committee for Foreign Investment in the United States, an inter-agency body that reviews foreign acquisitions for national security concerns, had been reviewing the acquisition. The White House was widely believed to have been on the verge of approving it.

While the administration has not commented on this deal in particular, in general it has argued that foreign investors can play a positive role in bringing in new technology and capital to turn around ailing American companies.

Known for production of industrial robots, Fanuc is owned 39 percent by Japanese computer maker Fujitsu Ltd. The Moore case echoes one involving Fujitsu in 1987, when that company backed out of the purchase of Fairchild Semiconductor Corp. in the face of criticism that national security dictated it be kept in American ownership. Correspondent Paul Blustein contributed from Tokyo.