* Rise in Italian debt yields add to concerns about global growth
* Tariff victims, such as steelmakers, shippers, lead decline
By Hideyuki Sano
TOKYO, May 29 (Reuters) - Japanese shares fell to one-month lows on Tuesday with investors selling cyclical shares as concerns over European politics added to the list of reasons to be cautious about the global economic outlook.
The Topix fell as much as 0.7 percent to as low as 1,758.84, its lowest level since late April. The Nikkei average dropped 0.7 percent to 22,324.
A sharp rise in Italian debt yields has added to worries about stability in Europe at a time when the region is losing economic momentum and global growth is under pressure from U.S. trade protectionism.
Steel companies and shippers -- the sectors that have been pummelled most by worries about U.S. trade policies -- led the losses, falling 1.7 percent and 1.3 percent, respectively.
"Investors are nervous about U.S. economic policies towards the mid-term elections. In addition, they are also wary that, at a certain point, there will de deleveraging as U.S. interest rates keep rising," said Takaaki Yoshino, head of investment technology development at Nissay Asset Management.
Rising U.S. interest rates are likely to gradually squeeze borrowers. Market players think that is already becoming a reality for weak spots in emerging economies, such as Argentine and Turkey.
In addition, the yen has bounced back to around 109 per dollar from its four-month low of 111.395 touched last week, threatening the outlook for Japanese exporters.
"With most earnings announcements out of the way, the market lacks strong catalysts for buying," said Hiroshi Masushima, market analyst at Monex Securities.
Decliners outnumbered gainers by about 5-1.
Nippon Paper Industries tumbled 7.6 percent after it said on Monday it saw a net loss of 18 billion yen ($165.11 million) in the current financial year, due to impairment loss as paper demand continued to decline on digitalisation.
Among the Tokyo Stock Exchange's 33 sector indexes, the paper and pulp company sub index was the worst performer, falling 2.3 percent.
Japan Display fell as much as 21 percent on worries about revenue losses after South Korea's Electronic Times reported that Apple Inc had decided to use OLED screens for all new iPhone models for next year.
Tokai Carbon rose 7.0 percent, hitting record highs after it raised the annual profit guidance by 47 percent.
The firm has benefited from a rise in the prices of graphite electrodes, one of its main products and its shares were among the best performers since last year. ($1 = 109.0200 yen) (Editing by Kim Coghill)