* Oil stocks, trading houses underperform on weak commodity prices
* Airlines outperform on hopes for cheaper fuel prices
By Ayai Tomisawa
TOKYO, Dec 8 (Reuters) - Japan’s Nikkei share average fell on Tuesday, with sharp declines in oil and commodity shares offsetting news that the economy had dodged a recession in the third quarter.
The Nikkei was down 1.0 percent at 19,494.24 points by midmorning, erasing early gains.
Oil stocks were battered after crude prices remained near 7-year lows in early Asian trading on Tuesday as OPEC continues to pump near record oil to defend market share.
Inpex Corp tumbled 5.4 percent and Japan Petroleum Exploration shed 3.5 percent.
Other commodity stocks such as trading houses fell on weakness in oil, iron ore and metal prices. Mitsubishi Corp dropped 2.3 percent, Sumitomo Corp shed 2.4 percent and Mitsui & Co declined 2.5 percent.
“Global cyclical shares which had risen lately are being unloaded because investors grew concerned,” said Yoshihiro Okumura, general manager at Chibagin Asset Management.
Such cyclical shares as chip-making equipment firms and electronics companies were sold, with Advantest Corp shedding 2.6 percent and Panasonic Corp declining 2.5 percent, both falling to two-week lows.
Financials were also hit, with Mizuho Financial Group dropping 1.6 percent, Sumitomo Mitsui Financial Group falling 1.0 percent and Nomura Holdings sliding 0.9 percent.
On the other hand, airline shares outperformed on hopes for cheaper fuel prices. ANA Holdings rose 0.9 percent and Japan Airlines Co gained 0.7 percent.
Better-than-expected revised growth data for the third quarter failed to help sentiment. Japan’s economy avoided a technical recession in the third quarter with the initial estimate of a contraction revised to an annualised expansion of 1.0 percent.
Analysts said investors were looking to the U.S. Federal Reserve’s policy setting meeting next week for the next catalyst.
“The market has priced in a rate increase by the Fed, but what it focuses on is the pace of rate increases in the future and any hint on that will likely set the market direction,” said Nobuhiko Kuramochi, a strategist at Mizuho Securities.
The broader Topix dropped 1.0 percent to 1,569.34 and the JPX-Nikkei Index 400 declined 1.0 percent to 14,124.56. (Editing by Kim Coghill)