Nikkei down 2.9 pct, broad sell-off on econ worry

(Updates to midafternoon)

By Taiga Uranaka

TOKYO, Sept 5 (Reuters) - Japan's Nikkei stock average shed 2.9 percent on Friday to hit a five-and-a-half month low, as investors dumped a wide range of shares on growing gloom about the global economy. Mizuho Financial Group (8411.T: Quote, Profile, Research, Stock Buzz) and other banks led the market lower, while Sony Corp (6758.T: Quote, Profile, Research, Stock Buzz) slid to its lowest level in nearly three years after a recall of its Vaio laptops.

Sumco Corp (3436.T: Quote, Profile, Research, Stock Buzz) became the biggest percentage loser on the Nikkei on a brokerage downgrade.

"Several bad things happened at once -- the fall on Wall Street, the stronger yen and position adjustment ahead of SQ," said Masayuki Otani, chief market analyst at Securities Japan, a brokerage, referring to settlement of index options and futures scheduled for next Friday.

"The market seems to be a bit overreacting. But amid the uncertainty, few investors are willing to buy," he said.

Exporters took a hit as the yen soared to a 13-month high against the euro <EURJPY=R>. The dollar was traded at 106.72 yen <JPY=>.

As of 0453 GMT, the benchmark Nikkei .N225 fell 361.54 points to 12,196.12, although it had earlier dipped as low as 12,163.33, its lowest since March 19. The broader Topix .TOPX was down 2.7 percent to 1,169.49 after also falling 3 percent earlier.

Shares of Sony Corp (6758.T: Quote, Profile, Research, Stock Buzz) slid 4.4 percent to 3,870 yen, its lowest level since late 2005, hit by the downturn in investor sentiment and news that it would recall 438,000 Vaio portable computers due to possible overheating that could burn users. [ID:nT150492] Banks were among the big losers, with Mizuho tumbling 7 percent to 410,000 yen.

Sumco fell 11 percent to 1,803 yen after Mitsubishi UFJ Securities cut its rating to "4" from "3" saying the maker of silicon wafers used for semiconductors is likely to suffer a sharp profit decline next business year due to heavy depreciation costs. (Reporting by Taiga Uranaka; editing by Sophie Hardach)