Nikkei falls as Greece worries spur bank jitters

* Worries Greece might default trouble investors

* Banks pare losses on view new regulation may not be so
stringent

* Carmakers gain on receding supply chain concerns

* Nikkei dips below 13-week moving average

* Takashimaya rises on bullish earning forecast

By Hideyuki Sano

TOKYO, June 27 (Reuters) - The Nikkei stock average dropped
one percent on Monday, as euro zone debt worries weighed on
markets before a crucial parliamentary vote in Greece this week,
with investors fretting over fallout from the debt crisis in the
banking system.

Bank shares came under pressure as their peers in Europe
were pummeled on worries they could suffer huge losses should
Greece default, though they pared some declines in late trade on
brokerage reports that a new capital requirement rule proposed
by an international watchdog may be less stringent than
previously thought.

"You still have Greek worries and rising interest rates in
emerging markets seriously souring the mood in the markets,"
said Mattia Ciancaleoni, director of equity sales at Citigroup.
    "This week is also heavy with lots of macroeconomic data
releases, and many players are also afraid to make big bets
ahead of the end of QE2 this week," said Ciancaleoni, referring
to the Federal Reserve's $600 billion bond buying programme due
to expire at the end of June.

The benchmark Nikkei fell 1.0 percent to 9,578.31,
while the broader Topix index shed 0.9 percent to
825.64.
    Bank shares, which led initial falls, recouped some of their
earlier losses to outperform the overall market, helped by
reports from some brokerages, such as Goldman Sachs and Nomura,
that said a proposal by global regulators to impose an extra
capital charge on the world's biggest lenders would not be
negative for Japanese banks.

"We view the release as incrementally positive for Japanese
banks which stand at the thinner end of global capital levels,
given a longer than expected lead time to build the requisite
buffers," said Philippa Rogers, a Goldman analyst, adding that
the move "reduces the worst case scenario of an up to 3 percent
buffer, which the market (had) expected".

Mitsubishi UFJ Financial Group ended flat
at 376 yen, while Sumitomo Mitsui Financial Group rose
0.2 percent to 2,404 yen.

They had fallen earlier in sympathy as European bank shares
marked multi-year lows on worries that banks may be hit hard
should Greece default, even though Japanese banks' direct
exposure to Greece is limited.

HARSH AUSTERITY MEASURES

Market participants are thus still looking closely at
whether Greece can avoid becoming the first euro zone country to
default on its debt as it votes on a package of harsh austerity
measures due on Wednesday and Thursday, with members of the
public vehemently opposing any austerity
measures.
  Advantest and some other chipmakers fell, with some
traders citing disappointing earnings from Oracle last
week as hurting the sector.

Some carmarkers edged up, however, bolstered after Nissan
said last week it would boost sales by 9.9 percent to
4.6 million vehicles this year, despite disruption to production
from the March 11 earthquake. The firm said after the close on
Monday that it wants to raise its share of the global auto
market to 8 percent within six years.

Honda Motors added 0.7 percent to 3,020 yen with
investors saying they expected it to quickly catch up with
Nissan, whose share price has returned to pre-quake levels.
Honda's share price is still more than 10 percent below
pre-quake levels while Nissan's is 3 percent higher.

    Takashimaya Co bucked the trend and at one point
rose to its highest in more than six weeks. It added 1.1 percent
to 536 yen.
    Japan's third-largest department store operator on Friday
raised the operating profit forecast for its first-half to Aug.
29 to 6.5 billion yen from an earlier prediction of a 1.5
billion yen loss, saying business had bounced back.

With the Nikkei having moved below its 13-week moving
average at 9,596, strong support is next seen between 9,514 and
9,498 where the benchmark's index's 25-day moving average and
the base of the Ichimoku cloud lie.
    The Nikkei's drop was roughly in line with a one percent
fall in Asian stocks outside Japan .

Trade volume on the Tokyo Stock Exchange's first section was
1.63 billion shares, below even last week's lacklustre average
of 1.73 billion. Decliners outnumbered advancers by 1,122 to
418.

(Additional reporting by Antoni Slodkowski; Editing by Joseph
Radford)