Nikkei slips 0.7 pct after rally, financials fall

* Banking shares lose steam after sharp rallies

* Dentsu sinks on Q4 loss, sees slow recovery

TOKYO, May 12 (Reuters) - The Nikkei average fell 0.7 percent
on Tuesday after booking a six-month closing high the previous
day, with bank shares such as Mitsubishi UFJ Financial Group
(8306.T) taking a breather following sharp gains fuelled by
optimism about the U.S. banking system.

Dentsu Inc (4324.T), Japan's biggest advertising agency, fell
more than 5 percent after reporting a fourth-quarter loss of 24.6
billion yen ($250 million) and forecast a weaker recovery than
expected this year. [ID:nT59670]

Exporters also fell, but Suzuki Motor (7269.T) rose after
saying it escaped a loss in January-March, the final quarter of
last business year, thanks to growth in its main Indian market.
But it forecast an 87 percent drop in profit this year citing
slumping global demand and a stronger yen. [ID:nT266342]

"Investors are locking in profits for now as a big event has
passed, in which the results of U.S. government stress tests on
big banks came in as expected," said Takahiko Murai, general
manager of equities at Nozomi Securities.

"The focus will now shift to U.S. consumer spending, which
accounts for a major part of its GDP, as investors will start
examining fundamentals to see if hopes for an economic recovery,
which had pushed up stock prices by more than 30 percent so far,
is really taking place."

The benchmark Nikkei .N225 slipped 65.80 points to
9,386.18. It rose 0.2 percent the previous day to its highest
close since Nov. 5.

Tuesday's fall came after the Nikkei had recovered about 34
percent from an intra-day low hit on March 10.

The broader Topix .TOPX shed 0.7 percent to 894.40.

After recent sharp rallies, Japan's banking subindex
.IBNKS.T fell 2.1 percent.

Top lender Mitsubishi UFJ slid 2.8 percent to 655 yen and
Mizuho Financial Group (8411.T) shed 1.9 percent to 255 yen.

Nomura Holdings Inc (8604.T), Japan's biggest brokerage, lost
3.1 percent to 691 yen.

Shares of Dentsu dropped 5.2 percent to 1,848 yen, one of the
top drags on the Nikkei 225.

Exporters also fell. Toyota Motor Corp (7203.T), the world's
biggest automaker, slipped 1.3 percent to 3,740 yen, while Honda
Motor Co (7267.T) dipped 0.7 percent to 2,880 yen.

Nissan Motor Co (7201.T), which is set to report results
after the market close, fell 0.8 percent to 511 yen.

But Suzuki shares rose 0.3 percent to 2,030 yen, after
opening lower.

Among high-tech exporters, Sony Corp (6758.T) shed 2.8
percent to 2,620 yen.
($1=98.30 Yen)
(Reporting by Aiko Hayashi; Editing by Michael Watson)