Nikkei sheds 2.1 pct on exporters, Advantest drags

* Good earnings factored in,disappointing results drag-analyst

* Advantest drop after warning of annual net loss

* Toyota extends losses on intensifying recall problems

By Aiko Hayashi

TOKYO, Jan 29 (Reuters) - Japan's Nikkei average fell 2.1 percent to a six-week closing low on Friday, hit by negative earnings surprises from firms such as chip equipment maker Advantest Corp (6857.T) and a stronger yen that pressured shares of exporters.

Toyota Motor Corp (7203.T) skidded further after the world's top automaker said it would extend a recall of millions of vehicles.

Trade in Toyota shares remained active with some 29 million shares changing hands, after volume of more than 38 million shares on Thursday, the most active day of trade in the carmaker's stock in more than 20 years.

Advantest Corp (6857.T), which supplies chip testers to chip makers such as Intel (INTC.O), sank more than 10 percent after saying it now expects an annual net loss of 13.5 billion yen ($150.1 million), missing the market consensus for a loss of 7.2 billion yen by 16 analysts. [ID:nTOE60R07I]

Nippon Steel Corp (5401.T), the world's second-biggest steelmaker, slipped after forecasting its first annual net loss in seven years as a building slump in Japan squeezes margins. [ID:nSGE60R0H7]

"Good earnings have already been factored in and investors are now instead sharply reacting to negative surprises such as cuts in earnings outlooks," said Hiroaki Kuramochi, chief equity marketing officer at Tokai Tokyo Securities.

"Uncertainty about the outlook for the U.S. economy and a stronger yen are also something of a double whammy for the Japanese market."

The benchmark Nikkei .N225 fell 216.25 points to 10,198.04, its lowest close since Dec. 21.

The Nikkei shed 3.3 percent in January, following December's 12.9 percent jump, which was the index's biggest one-month percentage rise in 14 years.

The broader Topix .TOPX shed 1.4 percent to 901.12.

Toyota fell 2 percent to 3,490 yen after the world's top automaker's problems intensified as it announced it would extend to Europe and China a recall of millions of vehicles due to faulty accelerator pedals and floor mats. [ID:nN27231388]

Toyota's stock has tumbled nearly 14 percent in the past week.

The dollar was steady against the yen at 89.95 yen JPY=, but the euro dipped 0.2 percent to 125.40 yen EURJPY=R, hovering near a nine-month low of 124.81 yen struck on trading platform EBS earlier on Friday.

Investors fret about a stronger yen as it eats into exporters' profits when they are repatriated.

Digital camera maker Canon Inc (7751.T) shed 3.9 percent to 3,535 yen and Honda Motor Co (7267.T) slipped 2.1 percent to 3,075 yen.

Advantest tumbled 10.2 percent to 2,253 yen, while Nippon Steel shed 1.5 percent to 329 yen.

Nintendo (7974.OS) fell 4.1 percent to 25,250 yen after the games maker posted a 23 percent fall in quarterly profit as software sales for its DS handheld game player slowed and it cut the price of its Wii console.

The company kept its forecast for a first annual profit decline in four years. [ID:nTOE60Q0AG] (Additional reporting by Masayuki Kitano; Editing by Joseph Radford)