Nikkei hits 3-wk low as carmakers drop; yen weighs

* Automakers drop as U.S. incentive plan to end on Monday

* Exporters slide as yen advances, investors take profits

* Trade cautious ahead of Japan's Aug. 30 election

By Aiko Hayashi

TOKYO, Aug 21 (Reuters) - Japan's Nikkei average hit its lowest point in three weeks on Friday, hurt by the yen's advance against the dollar, with Toyota Motor (7203.T) and other automakers also skidding on news that the United States will end a car rebate programme soon.

Market players said stocks extended losses in the afternoon due to a stronger yen, which curbs exporters' profits when repatriated, and weakness in the Hang Seng Index .HSI as investors nervously watch moves in Chinese stocks for cues this week.

"Uncertainty about the direction of the Chinese stock market and the news about the end of the U.S. auto incentive programme are bringing down the market," said Masaru Hamasaki, senior strategist at Toyota Asset Management.

"The news about the end of the programme came as a surprise and sparked concerns about a drop in sales as a result. That's negative for auto stocks."

The benchmark Nikkei .N225 shed 1.9 percent or 195.06 points to 10,188.35, after falling as far as 10,142.22, its lowest since July 30.

The broader Topix .TOPX slipped 1.6 percent to 943.45.

The Hang Seng Index slipped 1.6 percent, while the Shanghai Composite Index .SSEC added 0.3 percent, after having logged a 20 percent dive in the two weeks to Wednesday's close, unnerving investors around the world.

Investors were also cautious ahead of Japan's national election on Aug. 30.

Newspapers including the Nikkei business daily are predicting that the opposition Democratic Party may be headed for a landslide victory, trouncing the conservative party that has ruled for most of the past half-century. [ID:nT227863]

"A landslide victory by the Democrats has started to sound more realistic, and that is leading investors to close positions for now," said Fumiyuki Nakanishi, manager at SMBC Friend Securities.

AUTOMAKERS DRAG

Automakers lost ground after the U.S. government said it will suspend its popular "cash for clunkers" auto rebates on Monday as the programme's $3 billion budget runs dry, a month after it was launched. [ID:nN209152]

Toyota Motor Corp (7203.T), the world's largest carmaker, slid 2.9 percent to 3,980 yen, while Honda Motor Co (7267.T) dropped 4.6 percent to 2,940 yen and Nissan Motor Co (7201.T) lost 5.6 percent to 674 yen.

The dollar JPY= fell 0.6 percent to 93.64 yen, which hit exporters.

Canon Inc (7751.T) declined 1.7 percent to 3,480 yen and Sony Corp (6758.T) fell 2.4 percent to 2,420 yen. Kyocera (6971.T) lost 1.6 percent to 7,270 yen. (Editing by Chris Gallagher)