July 6, 2016 / 2:29 AM / 2 years ago

Nikkei tumbles on Brexit worries, hit by exporters and financials

* Nikkei still below pre-Brexit level

* Sterling’s further fall spooks stock investors

* All subsectors in negative territory

By Ayai Tomisawa

TOKYO, July 6 (Reuters) - Japanese stocks fell sharply on Wednesday, tracking a drop in Wall Street amid global uncertainty, while exporters were battered by a strong yen and banks tumbled on ongoing worries about counterparty risks after shares in European banks sank.

The Nikkei share average tumbled 3.1 percent to a more than a week low of 15,190.39 in midmorning trade.

Sterling’s further drop spooked sentiment, sliding more than 1 percent to $1.2874 during Asian trade, breaking through the previous trough of $1.3000 set overnight.

Japanese stocks rose last week as expectations grew that European central banks would step in to support markets rattled by Britain’s vote to leave the European Union. The Nikkei benchmark staged a six-day rally through Monday, but the index still remains below where it traded before the vote.

All of the Topix’s 33 subsectors in negative territory.

“We are very, very cautious,” said Isao Kubo, equity strategist at Nissay Asset Management. “When U.S. shares were rising, we thought risk sentiment seemed to have settled but we are bracing for deeper uncertainty now.”

Spooked by worries over Brexit and the global economy, investors flocked to the safe-haven yen. The dollar dropped 1.1 percent to 100.62 yen, battering exporters such as Toyota Motor Corp and Honda Motor Co, which declined 3.0 percent and 5.9 percent, respectively.

Banks extended drops, with Mitsubishi UFJ Financial Group slipping 4.1 percent and Sumitomo Mitsui Financial Group sliding 2.8 percent.

Brokerage stocks also took a hit, with Nomura Holdings diving 5.0 percent and Daiwa Securities Group tumbling 4.3 percent.

The broader Topix dropped 2.6 percent to 1,223.80 and the JPX-Nikkei Index 400 stumbled 2.7 percent. (Reporting by Ayai Tomisawa; Editing by Eric Meijer)

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