Japan's Nikkei falls 4% as tech stocks follow Wall Street lower

By Junko Fujita

TOKYO, Nov 5 (Reuters) - Japan's Nikkei share average fell 4% on Wednesday and was on track for its worst session in seven months, as high-flying technology stocks lost ground after Wall Street's sharp declines overnight.

The Nikkei .N225 was down 4% at 49,446.53, as of 0149 GMT, hitting its lowest point since October 24. It fell below the psychologically important 50,000 level for the first time since October 27. The broader Topix .TOPX fell 2.78% to 3,218.22.

U.S. stocks closed sharply lower on Tuesday as big banks warned that equity markets could be headed for a drawdown, reflecting mounting concerns over stretched valuations. .N

In Japan, technology investor SoftBank Group 9984.T fell 12.6%, while chip-testing equipment maker Advantest 6857.T lost 8.9%, dragging the Nikkei the most.

"The Nikkei's declines are in reaction to last month's sharp gains. Money is not fleeing Japan's stock market," said Seiichi Suzuki, chief equity market analyst at Tokai Tokyo Research Institute.

The Nikkei rose 16.64% in October in its biggest monthly gain in 35 years, as technology shares rallied on expectations artificial intelligence-related U.S. firms such as chip maker Nvidia NVDA.O would grow further.

Sentiment was also buoyed by expectation of large government spending to boost economic growth as Sanae Takaichi became Japan's new prime minister last month.

Investors are not dumping stocks as they pick up stocks with strong outlook, said Tokai Tokyo's Suzuki.

Nintendo 7974.T jumped 5.87% on Wednesday after the game maker hiked its annual sales forecast on Tuesday for the Switch 2 gaming device.

Uniqlo brand owner Fast Retailing 9983.T gained 2.1%. Furniture and home goods retailer Nitori Holdings 9843.T rose 2.3%.

Optical fibre maker Fujikura 5803.T, which provides materials for AI data centres, fell 9.3%.

All but two of the Tokyo Stock Exchange's 33 industry sub-indexes fell, with the nonferrous metals sector losing 7.7% to become the worst performer.