* Nikkei marks four straight days of losses * China data adds to concerns of global slowdown * Nikon falls 7 pct, Intel to buy stake in competitor ASML By Sophie Knight and Hideyuki Sano TOKYO, July 10 (Reuters) - Japan's Nikkei share average fell on Tuesday for the fourth straight session, reversing the morning's gains after weaker-than-expected Chinese imports stirred concerns about slowing demand in the world's second largest economy. The Nikkei closed down 0.4 percent at 8,857.73, as investor sentiment remained caught between recent gloomy data and the vague hopes that it will prompt more easing by central banks. The Nikkei has now dropped 1.8 percent from a two-month high of 9,136.02 hit on July 4, following a month-long rally. It also landed on a key trend-line that connects the intraday lows of June 4 and June 26-27 around 8,856, which some players interpret as a sign that its bull run since early June is over. "The market is likely to be pretty directionless through July. There's no real incentives for another sell-off, but the recent rally left it quite overheated according to technical indicators," said Hisao Matsuura, vice president of equity strategy at Nomura Securities. After rising as much as 0.8 percent in the morning, the benchmark index lost gains ain data showing China's imports rose 6.3 percent from a year ago in June, about half of what economists had expected. "The global economy is clearly deteriorating and there are worries whether China can gain momentum without fiscal stimulus," said Hisashi Kuroda, general manager of equity investment at Meiji Yasuda Asset Management. Hopes of more stimulus from China and elsewhere are playing an important role in supporting the market, with investors now eyeing the Bank of Japan's policy meeting on Wednesday and Thursday. But there are increasing doubts that the BOJ will stand pat on policy after it released a rather sunny outlook in an economic report last week, upgrading its assessment for all nine regions of the economy for the first time in nearly three years and saying post-tsunami domestic demand was strong. "Media reports that the BOJ may stay on hold are worrying - deteriorating data releases argue very much to the contrary," said Naomi Fink, Japan equities specialist at Jefferies, in a note. One such piece of data was a fall of 14.8 percent in Japanese machinery orders in May from the previous month, announced on Monday, and the largest drop since comparable numbers became available in April 2005. "We opine that effectively withdrawing stimulus, which would be the general idea of suspending even under-bid short-term operations without longer maturities, would be a very bad idea," Fink continued. Other market analysts have noted that the effect of easing on global equities and national economies has become blunter over time, and are looking to other factors to sway the market. "The catalyst for something to change will be yen weakness," said Trevor Hill, managing director of equities at UBS Securities. "If we were to see a significant weakening of the yen, folks are not positioned to capture returns on the rally from the exporters. People have continued to get more and more defensive with their exposures." The broader Topix index shed 0.7 percent to 758.60. A DEFENSIVE DAY Oil and coal finally turned around more than six months of underperformance to become the best performing subindex with a gain of 1.7 percent. The sector's sharp climb came after its ratio against the Topix hit a two-year low on Monday. But consumer electronics companies lagged, with Sharp Corp shedding 4.2 percent to a fresh 28-year low after announcing an out of court settlement with Dell Inc and two other companies over its TFT digital business. Sony Corp fell 2.5 percent, while Panasonic Corp dropped 1.3 percent after failing to impress with a new business plan designed to shake up the sprawling electronics maker, announced on Monday. Nikon Corp was knocked down 7 percent after Intel Corp said it would buy a 15 percent stake in Nikon competitor ASML, which etches circuits onto silicon wafers and is experimenting with extreme ultraviolet tech (EUV), an area where the Japanese camera maker has made little progress. Investors put their weight behind safer domestic bets, with the foods and pharmaceuticals in positive territory with gains of 0.1 and 0.2 percent respectively.