Nikkei falls on earnings fears, heading for 3rd day of losses
* Car parts maker Tokai Rika sags after Toyota recall * Shin-Etsu Chemical rises after Nomura upgrade By Dominic Lau TOKYO, Oct 11 (Reuters) - Japan's Nikkei average fell to its lowest in two months on Thursday, losing ground for a third straight day on mounting concerns that upcoming quarterly corporate earnings will be weak after the U.S. results season got off a slow start. The Nikkei eased 0.4 percent to 8,559.78. At one point, it fell as low as 8,514.63. The benchmark has fallen 7.8 percent since hitting a four-month high on Sept. 19. Ryota Sakagami, chief equity strategist at SMBC Nikko Securities said market participants were worried that this earnings season was set to yield a slew of cuts to annual forecasts, as well as some negative surprises. "However, if you look at the current prices of individual companies, they should have priced in downward revisions. The market is overreacting," he said, but added that the Nikkei could fall as low as 8,250 in a worst case scenario. SmartEstimates from Thomson Reuters StarMine show expectations for an average negative earnings surprise from Nikkei 225 companies of 1.3 percent for July-September quarterly results. The benchmark Nikkei is up 1.2 percent so far this year, trailing a 13.9 percent rise in the S&P 500 and a 9.9 percent gain in the pan-European STOXX Europe 600 index. On Wednesday, the U.S. S&P 500 fell for a fourth day after Chevron said third-quarter profits would be "substantially lower" than the previous quarter and Alcoa posted a quarterly loss and cut its outlook for global aluminum demand. Japanese automakers and parts suppliers were under pressure after Toyota Motor Corp said it would recall more than 7.4 million vehicles worldwide for faulty power window switches. The sector was already faced with concerns over the impact of sluggish global growth and anti-Japanese sentiment in China over a territorial dispute between the two countries. Car parts maker Tokai Rika Co Ltd slumped 8.8 percent after the recall by Toyota, which lost 1.7 percent, in line with a 1.8 percent fall in rival Nissan Motor Co. The broader Topix index slipped 0.3 percent to 714.54. Gainers included Shin-Etsu Chemical Co Ltd, which climbed 2.3 percent after Nomura upgraded its rating on the company to 'buy' from 'neutral' and lifted its price target.