Nikkei hits 1-month low on U.S. financial worries

                                
 *Nikkei falls 2.7 percent to a one-month low
                                
 *U.S. financial worries hit banks, insurers
                                
 *Exporters, recent gainers lose ground
 (Adds stocks, details)
                                
 By Aiko Hayashi
                                
 TOKYO, Aug 19 (Reuters) - The Nikkei average slid 2.7 percent
to hit a one-month low on Tuesday as exporters such as Canon Inc
<7751.T> and bank shares were battered after jitters about the
health of the U.S. financial system re-emerged.
                                
 Shares across the board fell, with insurers such as T&D
Holdings <8795.T> taking the brunt of the beating.
                                
 "Investors who bought stocks yesterday after coming back from
summer holidays are dumping them on the disappointing notion that
U.S. financial fears are continuing," said Kenichi Hirano,
operating officer at Tachibana Securities.
                                
 U.S. stocks sank on Monday on financial worries, pushing all
three major indexes down about 1.5 percent. [.N]
                                
 Shares in Fannie Mae <FNM.N> and Freddie Mac <FRE.N> tumbled
after Barron's reported the U.S. Treasury may need to bail out
the home finance giants.
                                
 Analysts are also bracing for Lehman Brothers <LEH.N> to
report a third-quarter loss of at least $1.8 billion, the Wall
Street Journal said. [ID:nN17380162]
                                
 The benchmark Nikkei <.N225> shed 349.02 points to 12,816.43
by the end of the morning trade, its lowest level since July 18.
                                
 The broader Topix <.TOPX> declined 2.5 percent to 1,232.56.
                                
 "Japanese financial shares had already been weak on poor
earnings, and they were further bruised by a fall in their U.S.
peers and after a recent rebound. Exporters fell after gains in
the last few days," said Yoshinori Nagano, chief strategist at
Daiwa Asset Management.
                                
 FINANCIALS DOWN
                                
 Top lender Mitsubishi UFJ shed 2.7 percent to 822 yen, in
line with the market. The bank sweetened its bid for full control
of California bank UnionBanCal Corp <UB.N> by 17 percent to $3.5
billion. [ID:nT257094]
                                
 No.2 Mizuho Financial Group <8411.T> fell 2.3 percent to
466,000 yen and Sumitomo Mitsui Financial Group <8316.T>, the
third-biggest bank, declined 3 percent to 680,000 yen.
                                
 Nomura Holdings <8604.T>, Japan's biggest brokerage, slid 2.6
percent to 1,483 yen.
                                
 Among insurers, T&D Holdings dropped 6 percent to 5,330 yen
and Sompo Japan Insurance <8755.T> sank 5.3 percent to 958 yen.
                                
 Property firm Mitsui Fudosan <8801.T> fell 2.8 percent to
2,260 yen.
                                
 Canon dropped 3.9 percent to 5,130 yen, while Honda Motor Co
Ltd <7267.T> lost 3.2 percent to 3,610 yen.
                                
 JGC Corp <1963.T> was one bright spot.
                                
 The stock climbed 3.4 percent to 1,969 yen and was the top
positive contributor to the Nikkei 225, after Nomura Securities
raised its rating to "buy" from "neutral". It said the plant
engineering firm is likely to enjoy strong demand for
energy-related plants.
                                
 Trade was light on the Tokyo exchange's first section, with
782 million shares changing hands, below last week's morning
average of 910 million.
                                
 Declining shares beat advancing ones by more than 14 to 1.
 (Reporting by Aiko Hayashi; Editing by Edwina Gibbs)