* Nikkei trims declines as investors buy on dips
* Automakers, machinery cos sensitive to global demand fall
By Ayai Tomisawa
TOKYO, Dec 5 (Reuters) - Japan's Nikkei slipped to a 1-1/2-week low on Wednesday morning after a sell-off on Wall Street and falling U.S. bond yields revived worries about a slowdown in the global economy and corporate earnings growth.
Financials, auto and machinery sectors took a beating, though some investors picked up stocks on the dips and helped the market recoup some of its earlier losses, traders said.
The Nikkei share average dropped 0.4 percent at 21,946.94 at the midday break, after slipping to 21,708.82 in early trade, the lowest level since Nov. 26.
Wall Street tumbled more than 3 percent on Tuesday, led lower by bank and industrial shares, as the U.S. bond market sent unsettling signs about economic growth.
A prominent Federal Reserve official's comments about the path of interest rate hikes added to the uncertainty for investors, as did setbacks for Britain's plans to leave the European Union.
Japan's financial firms, which invest in foreign bonds, tumbled and underperformed as the U.S. 10-year Treasury yield shed nearly 8 basis points, to 2.915 percent, after hitting its lowest level since Sept. 7.
The Nikkei has been volatile this week, falling on Tuesday after a rally on the previous day that was sparked by news the United States and China had agreed a temporary truce in their trade war. However, doubts over whether a durable trade deal can be struck between the economic heavyweights have since led to a retreat in riskier assets.
"The effectiveness of the 'medicine' faded more quickly than we had expected," said Yoshihiro Okumura, general manager at Chibagin Asset Management. "Right now, worries about a slowdown in the global economy are outweighing investors' optimism."
The broader Topix dropped 0.3 percent to 1,644.40, after falling to as low as 1,623.30, with insurers and banks underperforming.
Dai-ichi Life tumbled 3.3 percent, T&D Holdings shed 2.3 percent and MS&AD Insurance declined 1.3 percent. Mitsubishi UFJ Financial Group dropped 1.2 percent and Mizuho Financial Group slipped 1.1 percent.
Automakers and machinery makers, which are sensitive to global demand, were also battered. Honda Motor stumbled 2.7 percent, Subaru Corp shed 1.8 percent and Fanuc Corp lost 2.6 percent. Semiconductor-related shares weren't spared the investor angst either, with Advantest Corp declining 3 percent and Sumco Corp tumbling as much as 4.7 percent.
Declining issues outnumbered advancing ones by 1,206 to 839. (Editing by Shri Navaratnam)