Nikkei drops to 3-week low on yen, economic worry

TOKYO, Nov 2 (Reuters) - The Nikkei average slid 3 percent on Monday to hit its lowest point in three weeks, with exporters hit by a stronger yen and after weak U.S. consumer spending data sparked a sell-off on Wall street.

Bank shares such as Mitsubishi UFJ Financial Group (8306.T) fell after accounting expert Robert Willens said Citigroup (C.N) was likely to have a $10 billion fourth-quarter charge on its deferred tax assets, sparking worries about the sector. [ID:nN30427238]

Analysts also cited CIT Group's (CIT.N) bankruptcy filing on Sunday as further negative news for the market. CIT is a U.S. lender to hundreds of thousands of small and medium-sized businesses. [ID:nN01408863]

"Economic indicators are beginning to show uncertainty about the future, despite solid corporate earnings results so far," said Yutaka Miura, a senior technical analyst at Mizuho Securities.

"We have a bunch of news including CIT that is making investors nervous about the outlook for the economy as well as earnings going forward."

The benchmark Nikkei .N225 shed 2.6 percent to 9,778.53, after falling as much 2.98 percent to 9,736.14, its lowest level since Oct. 7.

The broader Topix lost 1.9 percent to 877.35.

The S&P .SPX lost 2.8 percent on Friday as the fragility of the U.S. economic recovery was highlighted by economic reports that showed U.S. consumers cut spending in September and consumer sentiment turned gloomier this month. [ID:nN30482062]

Among exporters, chip-tester maker Advantest Corp (6857.T) sank 4.1 percent to 1,975 yen and Canon Inc (7751.T) lost 3.7 percent to 3,400 yen. Honda Motor Co (7267.T) slid 2.1 percent to 2,820 yen.

Japan's top bank Mitsubishi UFJ fell 1.8 percent to 486 yen and Mizuho Financial Group (8411.T) slipped 1.6 percent to 180 yen.

But shares of consumer lenders soared after the Nikkei business daily said on Sunday that Japan will consider reversing its tightening of regulations on moneylenders to help self-employed business owners following the financial crisis. [ID:nT83915]

Aiful Corp (8515.T) soared 22.6 percent to 163 yen, while Credit Saison Co Ltd (8253.T) shot up 14.3 percent to 1,191 yen. (Reporting by Aiko Hayashi; Editing by Edwina Gibbs)