* Exporters up, defensive stocks down as investors reverse positions
* Market worried about growth amid prospect Fed won’t raise rates
By Ayai Tomisawa
TOKYO, July 7 (Reuters) - Japan’s Nikkei share average fell modestly on Thursday as investors remained wary after turmoil returned to global markets earlier in the week.
The Nikkei was down 0.4 percent at 15,318.05 points by mid-morning after briefly flirting with positive territory.
The index dropped 1.9 percent to a more than one-week low on Wednesday on worries of instability in Europe after Britain’s vote to leave the European Union and on fears that the global economy is facing a prolonged period of stagnation.
Volatile currency markets also kept investors on edge. The dollar dropped 0.3 percent to 101.04 yen, though it remained above the previous session’s low of 100.20.
“Though the Nikkei has recovered a bit since the bottom hit on Brexit, market sentiment is still sour,” said Hikaru Sato, a senior technical analyst at Daiwa Securities, adding that investors were still seeking safe-haven assets such as bonds.
As the key U.S. jobs data is slated to be out on Friday, investors are refraining from taking large positions, traders say. They say that the prospect of the U.S. Federal Reserve keeping U.S. interest rates on hold for a while relieved investors, but global growth concerns may persist.
The minutes for the Fed’s June 14-15 meeting, which took place before the British EU referendum, showed widespread unease over the potential impact of a Brexit and over the May job report which suggested a severe slowdown in hiring by U.S. employers.
On Thursday, investors reversed positions from the day before, when exporters and cyclical banking stocks underperformed.
Exporters rebounded, with both Toyota Motor Corp and Honda Motor Co rising 0.7 percent.
Banking stocks also gained ground. Both Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group rose 1.1 percent.
Defensive stocks, which managed to avoid a sharp sell-off on Wednesday underperformed on Thursday. KDDI Corp dropped 2.7 percent, while Terumo Corp shed 1.9 percent. Together, the stocks contributed a hefty 29 points, or nearly half of the Nikkei’s drop in the morning.
The broader Topix dropped 0.4 percent to 1,229.64 and the JPX-Nikkei Index 400 declined 0.4 percent to 11,080.26. (Editing by Kim Coghill)