Nikkei below 8,000 as yen advances against dollar

(Updates with new levels, details)

TOKYO, Oct 24 (Reuters) - Japan's Nikkei average slid more than 7 percent and fell below 8,000 for the first time in nearly 5-½ years, with exporters hit by the double punch of a Sony Corp (6758.T) profit warning and a sharply higher yen.

The dollar hit a 13-year low against the yen, falling below 95.77 yen, and the euro slid against the Japanese currency as well. JPY= EURJPY=R

Sony plunged more than 12 percent after the company halved its annual operating profit forecast by 57 percent, to far below market estimates in its second downward revision this year, blaming a firmer yen and slowing demand for cameras and flat TVs. [ID:nT6579]

The benchmark Nikkei .N225 was down 618.33 points at 7,842.65 by 0353 GMT, heading for the low of 7,603.76 hit in April 2003. Should it fall below that, it would be at its lowest point in 26 years.

The broader Topix fell more than 6 percent to 818.61.

"The Sony warning showed that predictions for company earnings have been too optimistic, and now with the stronger yen the whole situation is becoming much worse," said Hiroaki Osakabe, a fund manager at Chibagin Asset Management.

"We can't expect much good news concerning companies, which is setting off loss-cut sales, which are sparking still more sales in turn."

A stronger yen eats into profits when they are repatriated and also makes Japanese goods less competitive overseas.

Shares of Sony lost 12.6 percent to 2,005 yen.

The firm cut its operating profit forecast for the year through March to 200 billion yen ($2 billion), well short of the market consensus of 382 billion yen.

Canon Inc (7751.T) tumbled 9.3 percent to 2,760 yen, while Advantest Corp (6857.T), the world's No.1 maker of chip testers, lost 10 percent to 1,173 yen and Kyocera Corp (6971.T) shed 7.3 percent to 5,420 yen.

Toyota Motor (7203.T) dropped 5 percent to 3,250 yen after the Mainichi newspaper reported it would likely book an operating loss in North America for April-September in real terms excluding the impact of a gain in interest rate swaps.

A company source told Reuters earlier this month that Toyota was considering cutting its earnings outlook for the year to next March. [ID:nT352215] It will announce results on Nov. 6. (Reporting by Elaine Lies; Editing by Chris Gallagher)