Nikkei ends at 5-½ month low on economic worry

*Nikkei falls 2.8 percent to a 5-½ month closing low

*Market hit by economic worry, fear of weak U.S. jobs data

*Sony plunges on recall of 438,000 Vaio computers (Adds stocks and comments)

By Taiga Uranaka

TOKYO, Sept 5 (Reuters) - Japan's Nikkei average fell 2.8 percent to a 5-½ month closing low on Friday, as investors dumped a wide range of shares on growing gloom about the global economy.

Mizuho Financial Group (8411.T: Quote, Profile, Research, Stock Buzz) and other banks led the market lower, while Sony Corp (6758.T: Quote, Profile, Research, Stock Buzz) slid to its lowest level in nearly three years after a recall of its Vaio laptops.

Silicon wafer maker Sumco Corp (3436.T: Quote, Profile, Research, Stock Buzz) plunged 11.3 percent, becoming the biggest percentage loser on the Nikkei on a brokerage downgrade.

The market was hit by a broad sell-off from the opening, following a tumble on Wall Street after of U.S. labour market data fuelled nervousness about an upcoming non-farm payrolls report for August.

"Investors were selling as if the world's economy were falling into an abyss. It's an over-reaction. The market is very nervous about a string of economic data coming in amid uncertainty over the economic outlook," said Yoshihiro Ito, senior strategist at Okasan Asset Management.

The benchmark Nikkei .N225 ended down 345.43 points at 12,212.23, the lowest close since March 18. The index fell 6.6 percent for the week.

The broader Topix lost 2.6 percent to 1,170.84.

"Several bad things happened at once -- the fall on Wall Street, the stronger yen and position adjustment ahead of SQ," said Masayuki Otani, chief market analyst at Securities Japan, a brokerage, referring to settlement of index options and futures scheduled for next Friday.

Exporters took a hit as the yen soared to a 13-month high against the euro . The dollar was traded at 106.72 yen .

Some market participants, including Okasan's Ito, said the market might be nearing its selling climax, as a recent pickup in trading volume might be suggesting the market has started pricing in investors' fears.

But others said that the market could be in for further falls given the worsening economic climate around the world. The Nikkei hit this year's low of 11,691 set on March 17.

SONY BURNT

Shares of Sony Corp (6758.T: Quote, Profile, Research, Stock Buzz) slid 4.2 percent to 3,880 yen, its lowest level since late 2005, after the consumer electronics maker said it would recall 438,000 Vaio portable computers due to possible overheating that could burn users. [ID:nT150492] Banks were among the big losers, with Japan's No. 2 lender Mizuho tumbling 6.4 percent to 413,000 yen, and the industry leader Mitsubishi UFJ Financial Group (8306.T: Quote, Profile, Research, Stock Buzz) down 5.4 percent at 750 yen.

"Results for U.S. banks are only a few weeks away, and there may be some selling going on in fear that there may be some downward revisions," said Hiroaki Osakabe, a fund manager at Chibagin Asset Management.

Sumco fell 11.3 percent to 1,797 yen after Mitsubishi UFJ Securities cut its rating to "4" from "3" saying the maker of silicon wafers used for semiconductors is likely to suffer a sharp profit decline next business year due to heavy depreciation costs.

Trade picked up, with 2.3 billion shares changing hands compared to last week's daily average 1.78 billion.

Declining shares outnumbered advancing ones by more than 6 to 1.