3 MIN. DE LECTURA
(Refiling to correct Inpex's company code)
* All of Topix's 33 subsectors in negative territory
* Oil shares underperform after oil prices fall
By Ayai Tomisawa
TOKYO, May 23 (Reuters) - Japan's Nikkei share average fell on Monday on fears that the government will raise the sales tax next April, risking a further blow to the sluggish economy.
The Nikkei dropped 1.2 percent to 16,539.98 points, after falling to as low as 16,417.84, the lowest since May 16.
All of the Topix's 33 subsectors were in negative territory.
Investors' attention has been on the G7 finance leaders' meeting in Sendai, northeastern Japan, where the finance leaders discussed such topics as currencies and fiscal policies over the weekend.
Media such as the Nikkei business daily and the Asahi Shimbun reported that Japanese Finance Minister Taro Aso on Saturday told U.S. Treasury Secretary Jack Lew that Japan will raise the sales tax as planned.
Traders said that the market was caught off guard because the Nikkei business daily earlier this month had reported that Prime Minister Shinzo Abe had decided to delay the tax hike to avoid a further blow to weak consumer sentiment.
"The market was 100 percent convinced that a tax hike will be delayed," said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.
Fujito said that the market still has to wait for the prime minister to decide officially, but Aso's move has put Japan into a difficult position because it could be a 'breach of the international pledge' if Japan now says it will delay the tax hike.
At the meeting, G7 finance leaders called for a mix of monetary, fiscal and structural policies to boost demand but left it to each country to decide its own policy priorities - dashing Japan's calls for more aggressive joint fiscal action.
The United States also issued a fresh warning to Japan on Saturday against intervening in currency markets as the two countries' differences over foreign exchange overshadowed the gathering.
Selling on Monday was broad based, but energy shares particularly underperformed after oil prices slipped on a strong dollar as the odds grow of a June or July U.S. rate hike.
Inpex Corp dropped 2.8 percent and Japan Petroleum Exploration Co shed 1.8 percent.
Exporters were sold, with Toyota Motor Corp fell 1.4 percent and Honda Motor Co dropped 0.4 percent.
The broader Topix fell 1.0 percent to 1,330.21 and the JPX-Nikkei Index 400 declined 1.0 percent to 12,014.03. (Editing by Kim Coghill)