August 8, 2017 / 6:51 AM / in a year

Nikkei falls after exporters drop but steel shares hit 5-month high

* GS Yuasa soars on report on future electric-car battery

* Seasonal slowdown in August pressures market - analyst

* Steel sector rises on upbeat outlook

By Ayai Tomisawa

TOKYO, Aug 8 (Reuters) - Japan's Nikkei share average slid on Tuesday, as a stronger yen hurt exporters, offsetting gains in the steel sector based on a solid earnings outlook.

The Nikkei dropped 0.3 percent to 19,996.01. The broader Topix shed 0.2 percent to 1,635.32.

Japan Steel Works jumped 20 percent after the company raised its operating profit outlook to 14 billion yen from 12.5 billion yen for the year ending March 2018.

The iron & steel sector rose 0.7 percent to five-month highs.

The sector has been enjoying strong gains thanks to upbeat full-year outlooks from Japanese steelmakers. The companies are passing higher raw materials costs on to customers by raising product prices, betting on solid demand at home and abroad.

"Investors have preferred certain sectors with strong results such as construction and steel to cyclical stocks like automakers," said Nobuhiko Kuramochi, a strategist at Mizuho Securities.

But he added: "The Japanese market is sluggish as the dollar-yen is not giving a direction, while there is a seasonal slowdown in activity in August."

The dollar edged down 0.1 percent to 110.64 yen.

Exporters were lower overall, with Panasonic Corp falling 1.2 percent, Mazda Motor Corp shedding 1.3 percent and Olympus Corp sliding 2.0 percent.

Bucking the weakness, GS Yuasa Corp jumped 8.7 percent after the Nikkei business daily said the company will begin mass-producing as early as in 2020 a lithium-ion battery that would double the range of electric vehicles while keeping prices steady.

"Anything related to electric vehicles is of strong interest to investors now," said Yoshihiro Okumura, general manager at Chibagin Asset Management.

"As companies prepare for the shift (towards EVs in Europe), investors are also looking to spot the right stocks. They don't want to fall behind." (Editing by Richard Borsuk)

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