Nikkei down 0.6 pct, exporters fall on U.S. worries

(Updates to midmorning)

TOKYO, June 25 (Reuters) - Japan's Nikkei stock average dipped 0.6 percent to extend losses for the fifth day on Wednesday, led down by blue chip exporters such as Canon Inc (7751.T) after the latest data provided more signals for an economic slowdown in the United States.

Trade is expected to be thin as investors hold off bets ahead of the U.S. Federal Reserve's interest rate decision.

"U.S. housing prices continue to fall, and that hurts U.S. consumer spending since their credit status is often affected by home equity," said Kazutaka Oshima, chief strategist at Rakuten Securties.

Toyota Motor Corp (7203.T) fell as consumers were expected to rein in their spending at Japan's biggest export destination, but rival Honda Motor Co Ltd (7267.T) gained for the second day.

"It's a typical long-short strategy within the same sector, short selling Toyota and buying Honda, when consumers cut spending on cars," Rakuten's Oshima said.

Toyota, which is seen to have a larger share of the market for big and expensive cars, fell 1.7 percent to 5,140 yen. Honda, which is perceived less vulnerable when consumers back away from pricey cars, rose 0.8 percent to 3,800 yen.

As of 0100 GMT, the benchmark Nikkei .N225 fell 84.24 points to 13,765.32. The broader Topix lost 0.8 percent to 1,338.71.

Digital camera maker Canon lost 1.1 percent to 5,470 yen.

Central Japan Railway Co (9022.T) and East Japan Railway Co (9020.T) stood out, rising on expections for growth in passenger traffic as more holidaymakers are expected to leave their cars at home amid rising gasoline prices.

Central Japan rose 1.8 percent to 1.11 million yen and East Japan gained 1.5 percent to 840,000 yen.

The Fed is widely expected to hold interest rates steady at 2 percent later in the day. Investors will scrutinise the accompanying statement for clues on the central bank's thinking on mounting inflationary pressure.

Latest data provided more signs of an economic slowdown. U.S. consumer sentiment slid to a 16-year low in June and house prices suffered a record annual drop in April, according to data on Tuesday that suggested a retrenchment in spending that will hinder already meager economic growth. [ID:nN24338474] (Reporting by Taiga Uranaka; editing by Sophie Hardach)