Nikkei falls to 3-1/2-month low on weaker oil prices
* Oil shares such as Japex underperform
* Sharp rises after report govt-backed fund invested 200 bln yen
By Ayai Tomisawa
TOKYO, Jan 12 (Reuters) - Japan's Nikkei share average fell to a 3-1/2-month low on Tuesday as tumbling oil prices spooked investors, dragging down the broader market.
Investors in Japan returned to the market after a holiday on Monday to find oil prices were still crumbling and Chinese stocks were struggling after closing on Monday at their lowest since September.
The Nikkei dropped 1.9 percent to 17,369.19 points by midmorning, after falling to as low as 17,357.61 earlier, the lowest level since Sept. 30.
Analysts said that investors are increasingly risk averse, raising chances that the safe-haven yen will strengthen and drag down Japanese stocks further.
"The Japanese market will likely stay unstable for a while," said Yutaka Miura, a senior technical analyst at Mizuho Securities. "There are a lot of concerns in the market, but the two main things investors in Japan are concerned about now are a rising yen and continuous falls in U.S. shares."
All of the Topix's 33 subsectors were in negative territory, with oil shares underperforming sharply. Inpex Corp stumbled 4.3 percent and Japan Petroleum Exploration Co tumbled 5.6 percent. Continuación...