Nikkei falls as slowdown fears persist ahead of earnings

* Softbank falls, beaten by KDDI on sales of iPhone 5

By Sophie Knight

TOKYO, Oct 9 (Reuters) - Japan's Nikkei share averagedropped in early trade on Tuesday on growing concern thatcompanies will slash full year forecasts when they releasequarterly earnings, after the World Bank warned China's slowdownmay be more protracted than thought.

Mizuho Financial Group

dropped 3.1 percent afterthe company said late on Friday that it would post a 173.7billion yen ($2.2 billion) appraisal loss on its equityportfolio for the July-September quarter.

Automakers were weak, with Suzuki Motor Co


1.5 percent after the company said its Chinese sales sank 44.5percent in September from a year earlier after a territorialdispute triggered boycotts of Japanese goods.

The Nikkei

lost 0.7 percent to 8,802.00, with theNikkei China 50

, a list of 50 Japanese companies withhigh exposure to China, underperforming the broader market witha 1 percent fall.

Concern about dwindling demand in China, Japan's biggesttrade partner, was heightened after the World Bank cut itsgrowth forecast to 7.7 percent from a May forecast of 8.2percent. ID:nL3E8L82LA]

The World Bank also flagged the United States' "fiscalcliff" -- impending tax hikes compounded by sharp cuts ingovernment spending -- as a high risk factor, in spite of recentsigns of improvement in the U.S. economy, including a surprisedrop in unemployment announced on Friday.

"The market hasn't been that positive about the jobs figuresbecause the focus is now on earnings," said Fumiyuki Nakanishi,general manager of investment at SMBC Friend Securities.

"It looks like companies are going to lean towards cuttingtheir forecasts if anything, with the yen as it is," he added.

Many companies factored in an exchange rate of about 80 yento the dollar during the last earnings season, but the Japanesecurrency has stayed robust as a "safe haven" for investors,eroding erode revenues earned abroad. The yen hovered around78.29 to the dollar on Tuesday morning.

Mobile operator Softbank Corp

sagged 2.8 percent inheavy trade after the Nikkei business daily said KDDI Corp

had garnered more subscribers from the iPhone 5, partlybecause it allowed users to keep their phone numbers whenswitching carriers. KDDI gained 0.2 percent.

eAccess Ltd

, a mobile service provider Softbank hassaid it will buy in a share swap worth more than $1.8 billion,gained 3.3 percent and was the second-most traded stock on themain board by turnover. It reached 48,600 yen, eding closer tothe 52,000 yen per share Softbank has pledged to pay.

Also in favour were stocks of firms that make or deal in"induced pluripotent cells" or "iPS cells", after the twoscientists who discovered them won a Nobel Prize.

Takara Bio Inc

, which makes the cells, was untradedwith a glut of buy orders.The broader Topixlost 0.5 percent to 733.82.($1 = 78.1600 Japanese yen)(Editing by Richard Pullin)

((sophie.knight@thomsonreuters.com)(+81 3 6441 1833)(ReutersMessaging:)(sophie.knight.thomsonreuters.com@reuters.net))