* Japan market could have fallen further - analyst
Nikkei futures closed 19,395 on CME
* Financials lower after U.S. yields fall on soft data
By Ayai Tomisawa
TOKYO, Aug 14 (Reuters) - Japan's Nikkei share average tumbled to near a three-month low on Monday, recoiling in response to a stronger yen as tensions between the United States and North Korea prompted investors to dump riskier assets.
The yen's gains and rising geopolitical concerns overshadowed data showing Japan's economic grew at a much stronger pace than expected in the second quarter.
The Nikkei was down 0.8 percent at 19,564.98 points by the midmorning break, after falling to as low as 19,486.48 earlier, the lowest level since May 18.
Japanese markets were closed on Friday for a national holiday, and were catching up in part to global equity market losses and a drop in the dollar that day.
But some analysts said that the Nikkei may have fallen further if not for the encouraging economic data, as well as expectations that the Bank Of Japan would buy exchange-traded funds.
"Compared to how the Nikkei futures closed in Chicago on Friday, the market is well supported," said Hikaru Sato, a senior technical analyst at Daiwa Securities.
The Nikkei 225 futures closed at 19,395 on Chicago Mercantile Exchange on Friday, which had suggested that the Nikkei would fall sharply on Monday.
Japan's economy grew in the second quarter at the fastest pace in more than two years as consumer spending and capital expenditure both rose at the fastest in more than three years.
Gross domestic product expanded an annualised 4.0 percent in April-June, more than the median estimate for 2.5 percent annualised growth and the biggest increase since January-March 2015.
"Once geopolitical risks settled down, investors will likely revisit the fact that Japan's fundamentals are strong," Sato said.
For the near term at least, tensions over North Korea are expected to remain a key theme for global investors, weighing on risky assets including Japanese stocks, traders said.
Insurers and banks, which invest in higher-yielding products such as foreign bonds, underperformed after U.S. yields dropped on weaker-than-expected inflation data.
The data further eroded expectations of an interest rate hike by the U.S. Federal Reserve at its December monetary policy meeting.
T&D Holdings tumbled 2.6 percent and Dai-ichi Life Holdings plumbed 2.4 percent, while Mitsubishi UFJ Financial Group dropped 1.8 percent.
Exporters were broadly lower after the dollar dropped to 108.72 yen on Friday, its lowest level since April 19, before crawling back to 109.29 in Monday Asian trade.
Toyota Motor Corp dropped 1.0 percent, Honda Motor Co shed 1.4 percent and Panasonic Corp fell 1.7 percent.
The broader Topix shed 0.8 percent to 1,603.95. (Editing by Kim Coghill)