* Nikkei suffers biggest one-day percentage loss since Jan. 16 * Uncertainty over Italian election results spook market * Exporters decline sharply as yen rises vs dollar By Tomo Uetake TOKYO, Feb 26 Japan's Nikkei average tumbled 2.3 percent on Tuesday, its biggest one-day drop in more than a month, as concerns grew that inconclusive elections in Italy could reignite the euro zone debt crisis. The Nikkei dropped 263.71 points to 11,398.81, retreating from a 53-month high hit on Monday after sources said the Japanese government was likely to nominate Asian Development Bank President Haruhiko Kuroda, an advocate of monetary easing, as its next central bank chief. "The Italian elections and foreign exchange movements following the outcome of the vote weighed on the market today. Nothing else mattered," said Yasuo Sakuma, portfolio manager at Bayview Asset Management. The euro fell to as low as 118.74 yen as a strong showing in Italian elections by groups opposed to the country's economic reforms triggered worry that Europe's debt problems could once again destabilize the global economy. It last traded at 120.12 yen. The dollar, which tumbled to a low of 90.85 yen, its lowest in nearly a month, last traded at 91.99 yen. Italy's centre-left coalition won the lower house but fell short of a majority in the upper house, raising concerns of a deadlock in the government. Exporters bore the brunt of the selloff. Sony Corp, the eighth-most actively traded firm by turnover on the mainboard, dropped 3.7 percent. Ricoh Co and Nikon Corp shed 3.9 percent and 3.4 percent respectively. Bayview's Sakuma said the reason why exporters fell today is not due to their European exposure but rather reflect their recent sharp gains. "I think the market is getting acrophobic." He noted that some companies such as Asics Corp outpaced the overall market even though the firm is relatively highly exposed to the European markets. The stock slipped 0.4 percent. "There was some expectations among market players that the central bank would step into the market to buy ETFs (to support the markets)," an equity trader at a foreign brokerage said. "But apparently it wasn't the case today and thus the index faced additional selling pressure in the afternoon due to that disappointment." When the broader Topix falls more than 1 percent in the morning session, the BOJ typically buys exchange-traded funds in the afternoon. ABE HOPES SUPPORT The Topix closed 1.4 percent lower at 966.77 in active trade, with 3.9 billion shares changing hands, compared with last week's average daily volume of 2.93 billion shares. Wacom Co Ltd, a supplier to Samsung Electronics Co Ltd, bucked the trend and jumped 10.2 percent to a six-year high after Nomura Securities upgraded its rating to 'buy' from 'neutral'. Analysts said that while the Japanese market is unlikely to be immune from euro-zone problems in the short run, expectations that Prime Minister Shinzo Abe will continue to pursue bold policies to revive the economy would support long-term investors' appetite for Japanese stocks. The benchmark Nikkei has rallied over 30 percent since mid-November, led by gains for exporters as the yen fell sharply on Abe's aggressive fiscal expansionary and monetary easing polices. "A negative impact (from Europe's problems) to the Japanese market is unavoidable for now, but hopes for Abenomics have not changed," said Takuya Takahashi, a strategist at Daiwa Securities. Looking ahead, investors were also awaiting testimony later in the day from Federal Reserve Chairman Ben Bernanke for further clues of when the U.S. central bank intends to slow down or stop its bond-buying programme.