Nikkei falls back after surge, Daiichi Sankyo down

* Nikkei succumbs to selling after five days of gains

* Banking shares lose steam after sharp rally

* Daiichi Sankyo tumbles, books large annual net loss

TOKYO, May 12 (Reuters) - The Nikkei average fell 1.1 percent on Tuesday after hitting a six-month closing high the previous day, with bank shares such as Mitsubishi UFJ Financial Group (8306.T) retracing some of their earlier sharp gains fuelled by optimism about the U.S. banking system.

Dentsu Inc (4324.T), Japan's biggest advertising agency, fell more than 7 percent after reporting a fourth-quarter loss of 24.6 billion yen ($250 million) and forecasting a weaker recovery than expected this year. [ID:nT59670]

"Investors are becoming a little nervous after several days of steady gains. Their appetite for risk was dulled slightly after U.S. banks did an about-face yesterday and fell as some gear up to raise more capital," said Shoji Yoshigoe, a senior investment strategist at Mitsubishi UFJ Securities.

"The selling in the market is still mostly limited to profit taking," Yoshigoe said.

The benchmark Nikkei .N225 shed 99.64 points to 9,352.34. It rose 0.2 percent on Monday to its highest close since Nov. 5.

Tuesday's fall comes after the Nikkei rose more than 11 percent during five consecutive days of gains.

DAIICHI SANKYO TUMBLES, BANKS FALL

Closely watched corporate earnings releases continued on Tuesday, with Japanese drugmaker Daiichi Sankyo (4568.T) dropping 9.3 percent to 1,654 yen after booking a large annual net loss on its stake in India's generic drugmaker Ranbaxy Laboratories (RANB.BO) and forecasting a small profit this year. [ID:nT64620]

The drugmaker was one of the top drags on the Nikkei 225.

Shares of Dentsu slid 7.8 percent to 1,798 yen.

Japan's banking subindex .IBNKS.T fell 3.7 percent, after rising nearly 20 percent over the past three trading days on growing investor confidence about the banking system in the wake of U.S. government stress tests.

Top lender Mitsubishi UFJ slid 5 percent to 640 yen and Mizuho Financial Group (8411.T) shed 3.9 percent to 250 yen.

Exporters also fell on a stronger yen, which curbs their profits when funds are repatriated. The dollar dipped 0.2 percent to 97.30 yen JPY= after moving above 98 yen the previous day.