Nikkei falls on economic and credit worries

TOKYO, July 10 (Reuters) - The Nikkei stock average fell 0.7 percent on Thursday, led by exporters such as Kyocera Corp following a steep drop on Wall Street on growing worries about the economy and credit problems.

Bank shares were mixed, with top lender Mitsubishi UFJ Financial Group rising 0.9 percent while No. 2 Mizuho Financial Group lost 1 percent.

Market analysts said the Tokyo market, which pared most of its earlier gains on Wednesday after news of an Iran missile test, was unlikely to fall sharply as one of investors' biggest worries had not materialised.

"There were fears about a jump in oil prices after Iran's missile test, but they didn't change much, and forex moves are also relatively calm," said Norio Shimura, deputy head of the equity department at Chuo Securities.

"Given U.S. stocks' falls, we are seeing selling this morning, but after that runs its course, the Nikkei might even regain ground back to 13,000," he said.

As of 0040 GMT, the benchmark Nikkei .N225 had fallen 95.45 points to 12,962.24. The broader Topix lost 0.4 percent to 1,279.89.

U.S. stocks tumbled on Wednesday, dragging the S&P 500 into a bear market, as worries about more credit losses hurt financial companies and Cisco Systems led technology shares lower after its CEO raised fears of an extended economic downturn.

High-tech parts maker Kyocera fell 2.1 percent to 9,150 yen, the biggest drag on the Nikkei.

Mitsubishi UFJ rose to 964 yen and Mizuho fell to 507,000 yen.

GS Yuasa Corp jumped 3.6 percent to 459 yen after the Nikkei business daily said Mitsubishi Motors Corp will start selling electric cars to retail customers next year, a year ahead of schedule, as it sees opportunities for these cars amid surging gasoline prices.

GS Yuasa, Asia's biggest car battery firm, has set up a joint venture with Mitsubishi Motors and Mitsubishi Corp to produce lithium-ion batteries for electric cars.

Mitsubishi Motor rose 1.6 percent to 190 yen, while Mitsubishi fell 1.9 percent to 3,140 yen. (Reporting by Taiga Uranaka; Editing by Chris Gallagher)