* Reports of poor earnings for Chinese funds sparks sell-off * Fanuc drags after H1 earnings disappoint * Canon weak after cutting forecast, but Advantest gains By Sophie Knight TOKYO, Oct 26 (Reuters) - Japan's Nikkei share average was knocked off a four-week high on Friday on concern that Chinese funds face heavy redemptions after a poor quarterly performance, and as disappointing earnings from Fanuc Ltd dragged. The Nikkei fell 1.4 percent to 8,933.06 after Asian shares slumped on a report in the China Securities Journal that Chinese funds had posted a 75 billion yuan ($12.02 billion) loss in the three months to September. "The region is selling off quite aggressively ... but we certainly had a good run there despite weak results in the U.S.," said a trader at a foreign bank. "The yen has been very encouraging and there were a lot of people getting long." The benchmark rallied more than 6 percent between a two-month low on October 12 and Thursday's close as a softer yen and expectations of substantial easing from the Bank of Japan overshadowed poor earnings and profit warnings. Sources have said the BOJ is expected to ease monetary policy next week by expanding asset purchases by at least 10 trillion yen and may commit to injecting cash until 1 percent inflation is achieved, a distant goal given core consumer prices dropped 0.1 percent in the year to September. "The BOJ has to decide when to spend its chips because whatever it does, the global economy, and particularly China, is slowing down," said Yuuki Sakurai, CEO of Fukoku Capital Management. Industrial robot maker Fanuc Ltd, which has high exposure to China, fell 3.1 percent after the company said its operating profit had fallen 12.6 percent in the first half and forecast a 7.6 percent fall for the full year. Canon Ltd lost 3.2 percent after cutting its full-year profit outlook by almost 10 percent and posting a weaker-than-expected quarterly profit. Its sales were hit by anti-Japan sentiment in China after a territorial row, as well as slowing demand in Europe. "Digital camera sales volume and profits were weaker than we expected. In the short term, the stock is likely to rise if yen depreciation is more than an aberration, but longer term, we think the company needs to add to its earnings base," JPMorgan analyst Hisashi Moriyama wrote in a note. The broader Topix lost 1.4 percent to 741.23 in strong trade, with volume at 112.6 percent of its 90-day average. CLOUDY OUTLOOKS Earnings from Japanese firms have been less than stellar - 13 out of the 19 Nikkei companies reporting so far have undershot expectations - but some companies have seen their shares gain on relief that their results were not worse than expected. Advantest Corp moved 3.6 percent higher after its downward revision in guidance for this financial year fell within market expectations, with traders noting the maker of chip testing devices was still expecting a profit. Panasonic Corp lost 2.8 percent on news it may shrink its mobile phone business as it yields to competitors Apple Inc and Samsung Electronics Co, boding ill for the company's earnings next week. Sharp Corp added 3.8 percent after the Asahi newspaper said the struggling TV maker was considering financial tie-ups with U.S. tech companies such as Hewlett-Packard , Intel Corp, Microsoft, Google and Apple Inc. Reporting after the bell, mobile provider NTT Docomo Inc cut its operating profit outlook for the full year by 9 percent, while internet provider NEC Corp turned an operating loss of 7.88 billion yen ($98 million) in the first quarter into a profit of 47.4 billion yen for the first half.