Nikkei sags as China slowdown stokes concern over earnings

* Softbank falls, trumped by KDDI on iPhone 5 sales

* Sharp takes a tumble after Goldman Sachs downgrade

* Real estate outperforms on domestic money - source

By Sophie Knight

TOKYO, Oct 9 (Reuters) - Japan's Nikkei share average fellthe most in eight sessions on Tuesday on concern that companieswill slash profit forecasts further following a World Bankwarning that the slowdown in key trading partner China may bemore protracted than thought.

Mobile operator Softbank Corp

was in focus afterthe Nikkei business daily said rival KDDI Corp


beaten its subscriber figures for the iPhone 5. The stock slid1.2 percent and was the most traded on the main board byturnover.

Automakers were weak with Suzuki Motor Corp


2.1 percent after the company said its Chinese sales sank 42.5percent in September from a year earlier after a territorialdispute triggered boycotts of Japanese goods.

"There is a big downside for the market in the shape ofChina, which is pulling the Japanese market away from itscorrelation with the U.S. market," said Norihiro Fujito, generalmanager of investment at Mitsubishi UFJ Morgan Stanley.

Japanese companies have been issuing profit warnings astheir sales take a hit from the boycott and closure of storesand factories, as well as a double whammy of dwindling demandacross China. The World Bank cut its growth forecast for Chinato 7.7 percent from a May forecast of 8.2 percent on Monday.ID:nL3E8L82LA]

The Nikkei dropped 1.1 percent, its biggest fall in eightsessions, following a local holiday on Monday and after Chinesemarkets took a break for holidays last week.

"The market is unusually weak today. It feels like someforeign money is being shifted out of Japan after it was used asa proxy while China was on holiday last week," said StefanWorrall, director of cash sales at Credit Suisse in Tokyo.

"That would explain why real estate is up, which this yearseems to be on a stealth rally irrespective of the fact thatforeigners don't really get involved in the sector," he added.

Selling led by foreign investors tends to leave the realestate sector relatievly unaffected. The real estate sub-index

has added 38.3 percent so far this year and cameclose to its year-to-date March 15 high of 875.98 on Tuesday.The broader Topix

lost 1.3 percent to 727.68 inmoderate trade, at 101.7 percent of its average over the past 90days.

The pharmaceutical sector

also outperformed themarket, stepping up 0.4 percent, thanks to stocks of firmsmaking products related to "induced pluripotent cells" or "iPScells", after the two scientists who discovered them, includingone Japanese man, won a Nobel Prize.

Takara Bio Inc

, which makes the cells, was untradedwith a glut of buy orders through the day's session beforelogging a 19.2 percent rise after close, while Shimadzu Corp

, which develops equipment to culture the cells,advanced 1.2 percent.SHARP SLIDESSharp Corp

took a hammering, losing 14.7 percentafter Goldman Sachs cut the troubled consumer electronicscompany's rating to "Sell" from "Neutral" and slashed its targetprice to 120 yen from 175 yen.

Sharp's stock has fallen 77.6 percent so far this year,causing shareholder Pioneer Corp

to book a likely netloss of 4.8 billion yen ($61 million) in the six months endingSept. 30, down from a previous forecast of 1 billion yenprofit


Pioneer fell 5.9 percent on Tuesday after the carelectronics company said on Friday that that it would likelybook a net loss of 4.8 billion yen ($61 million) in the sixmonths ending Sept. 30, down from a previous forecast of 1billion yen profit, due to a fall in the value of Sharp Corpshares that it owns.


Elsewhere, rumours of a strike halting production of theiPhone at one of Apple Inc

's Chinese factories, thoughdenied by the company, also weighed on major suppliers such asMurata Manufacturing Co Ltd, which lost 3.9 percent.($1 = 78.1600 Japanese yen)(Editing by Sanjeev Miglani)

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

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