Nikkei tumbles to more than 3-month low as yen gains strength
* Nikkei has dropped 6.7 pct since beginning of 2016
* Investors unwind long dollar positions - traders
* Unknown risk about China hurts market - traders
By Ayai Tomisawa
TOKYO, Jan 7 (Reuters) - Japanese stocks tumbled on Thursday for a fourth day after China's central bank weakened the yuan - sparking a sharp strengthening of the yen and rattling investors already on edge over geopolitical tensions.
The Nikkei share average tumbled 2.3 percent to 17,767.34, the lowest closing level since Oct. 2.
Chinese share prices plunged 7 percent soon after the open, leading to a nation-wide trading halt for the second time this week.
The dollar dropped as much as 0.7 percent to 117.66 yen , a level last seen in late August, battering exporters and other blue chip stocks.
"There have been lots of long positions on the dollar due to expectations that the U.S. Federal Reserve will raise U.S. interest rates several times," said Kyoya Okazawa, head of global market & commodity derivatives at BNP Paribas. "People are unwinding these positions and that's hurting the Japanese market more than other developed markets." Continuación...