Nikkei falls 1.4 pct, caution rules ahead of data

(Updates to midmorning)

TOKYO, March 31 (Reuters) - Japan's Nikkei average fell 1.4 percent on Monday, with investors locking in profits following last week's sharp gains and before a raft of key economic data.

Trading house Marubeni Corp (8002.T: Quote, Profile, Research, Stock Buzz) plunged 6.6 percent after it said its U.K. subsidiary had suffered losses amid the global credit market turmoil. Separately, Lehman Brothers (LEH.N: Quote, Profile, Research, Stock Buzz) said it planned to sue Marubeni for repayment over a case of suspected fraud. [ID:nSP279128]

Financial shares such as Japan's largest bank, Mitsubishi UFJ Financial Group (8306.T: Quote, Profile, Research, Stock Buzz), were under selling pressure after their U.S. peers fell on concerns about potential dividend cuts.

"The Tokyo market rose sharply on Friday, but investors found it hard to make a move following falls on Wall Street and ahead of (the Bank of Japan's) tankan and employment data," said Noritsugu Hirakawa, strategist at Okasan Securities.

Investors will be closely watching the BOJ's quarterly tankan survey of corporate sentiment on Tuesday to gauge how much the global market turmoil has affected the Japanese economy.

Among other key data, a U.S. jobs report on Friday will be watched for further clues on the health of the world's largest economy.

As of 0131 GMT, the benchmark Nikkei was down 1.4 percent at 12,637.26. The broader TOPIX fell 1.6 percent to 1,224.38.

The market shrugged off early data showing that Japan's industrial output fell less than expected in February. [ID:nTKF003035]