* Nikkei falls to lowest since early March
* Support at 10,000 as breaks below 200-day MA
By Elaine Lies
TOKYO, May 17 (Reuters) - Japan's Nikkei average dropped 2.7
percent to a two-month low on Monday as the euro's fall to a
four-year trough and slides in overseas shares raised fears the
global economy could sustain more damage than expected.
Exporters such as Canon Inc <7751.T> slid as the yen climbed,
with the dollar falling 0.7 percent to below 92 yen <JPY=> and
the euro down 1.3 percent against the Japanese currency.
<EURJPY=>
The euro marked a four-year low against the greenback earlier
on Monday as investors worried that harsh spending cuts mandated
by a bailout plan may choke off a fragile recovery in the
16-country euro zone.
"Fundamentally, the worry is really that the fiscal situation
in the southern European states will hit the European economy,
and then the global economy," said Takashi Ushio, head of the
investment strategy division at Marusan Securities.
"This would affect exporters not only in Japan but also China
as well, raising fears that Chinese economic growth could cool
too. That's the basic worry today."
U.S. stocks fell on Friday on a combination of weak earnings
from retailers, Senate backing for limits on credit card fees and
concerns over the sustainability of European public debt. []
The benchmark Nikkei <> slipped 284.96 points to
10,177.71 after briefly falling as low as 10.158.30, its lowest
since early March, and looked on track for a two-month closing
trough. The broader Topix <> fell 1.5 percent to 922.04.
The Nikkei fell below its 200-day moving average, currently
around 10,350, for the first time in over a week, with the next
target at 10,000, a key psychological support level.
The Nikkei's relative strength index (RSI) fell to 35 on
Monday. Anything from 30 downwards is considered oversold.
"There's a lot of nervousness still about the tough fiscal
situation in the euro zone, and while Japanese earnings were good
there's a lot of uncertainty about what lies ahead over the next
year, especially given the stronger yen," said Hiroichi Nishi,
general manager at the equity division of Nikko Cordial
Securities.
Canon Inc <7751.T> lost 2.6 percent to 3,940 yen, Sony Corp
<6758.T> fell 4.2 percent to 2,824 yen and chip tester maker
Advantest Corp <6857.T> lost 4.3 percent to 2,190 yen.
But NTT <9432.T> jumped 3.5 percent to 3,855 yen after
Japan's largest telecom firm said it would cancel all of its 251
million treasury shares, or about 16 percent of shares
outstanding, over two years.
(Reporting by Elaine Lies; Editing by Joseph Radford)
