Nikkei falls as economy worry outweighs bailout vote

*Nikkei down 1.9 pct, hits 3-year closing low

*Topix down 2.2 pct, hits 4-year closing low

*Economy worries weigh despite U.S. Senate passing bailout

*Carmakers, machinery stocks drop on global economy worries

*Investors turn defensive, drugmakers rise (Adds stocks, details)

By Aiko Hayashi

TOKYO, Oct 2 (Reuters) - The benchmark Nikkei average slipped 1.9 percent to a three-year closing low on Thursday despite passage of a $700 billion financial bailout bill by the U.S. Senate, as growing fears about the global recession offset relief.

The broader Topix index fell 2.2 percent to book its lowest close since October 2004.

Auto shares such as Toyota Motor Corp dragged down the market after major automakers reported plunging U.S. sales for September as an escalating credit crisis hit the slumping industry.

Komatsu Ltd, the world's second-largest maker of earth-moving equipment, and other machinery stocks also tumbled on concerns about the outlook for the global economy.

"The market had largely factored in that the Senate would approve the bill and market-driving news seem to be out for now," saidKoichi Ogawa, chief portfolio manager at Daiwa SB Investments.

"I expect the U.S. House to also approve the bill, but the focus is now on whether the deterioration in the global economy, including poor auto sales in the U.S., will ever stop."

The Nikkei .N225 shed 213.50 points to end at 11,154.76, the lowest close since May 2005, while the Topix fell 24.16 points to 1,076.97.

The Senate approved the $700 billion bailout bill that political and financial leaders had warned was crucial to averting economic catastrophe.

"It's a completely different world now," said Masamichi Adachi, a senior economist at JPMorgan Securities.

"All the things U.S. authorities are doing now are simply aimed at preventing a global meltdown. They might trigger a short rally in markets but won't offer a fundamental solution."

A series of weak economic data also helped dampen investor confidence.

U.S. factory activity shrank in September to its lowest since the 2001 recession, and private employers shed jobs for the third time in four months. On Wednesday, the Bank of Japan's quarterly tankan survey showed sentiment among big manufacturers turning negative for the first time in five years.

Yumi Nishimura, deputy general manager at Daiwa Securities SMBC, said supposing the U.S. bailout bill would be approved by the House, the focus will shift to corporate earnings next week.

"The market will probably move to consolidate at the current low levels," she said.

CARMAKERS, MACHINERY SHARES BATTERED

Shares of Toyota lost 3.4 percent to 4,310 yen to hit the lowest point this year, while Honda Motor Co Ltd shed 4.5 percent to 3,000 yen.

Komatsu dropped 10.7 percent to 1,503 yen, its lowest in three years, and Hitachi Construction Co tumbled 14.7 percent to 2,055 yen. Steelmakers also dropped, with Nippon Steel Corp down 8.5 percent at 357 yen. "Stocks sensitive to the health of the global economy are being sold for now as the market is in a state of panic," said Ogawa at Daiwa SB Investments.

High-tech shares such as Sony Corp and Advantest lost ground after a slide in their U.S. peers -- including Apple Inc , which fell 4 percent. Sony dropped 5.9 percent to 3,020 yen and Advantest declined 6.9 percent to 2,015 yen.

Defensive shares helped brake the market's fall, though, with drugmakers extending recent gains. Takeda Pharmaceuticals Co Ltd rose 1.3 percent to 5,590 yen and Astellas Pharma Inc added 1.8 percent to 4,660 yen.

Fujitsu Ltd jumped after a company source said the firm is in talks with Western Digital Corp and others on the sale of its money-losing hard drive business, though Fujitsu denied it was approaching an agreement or arranging a sale.

It gained 4.7 percent to 628 yen.

Trade picked up on the Tokyo exchange's first section, with 2.1 billion shares changing hands, compared with last week's daily average of 1.9 billion.

Declining stocks outpaced advancing ones by nearly 5 to 1. (Reporting by Aiko Hayashi; Editing by Michael Watson)