Nikkei falls on US demand worries, Canon down

TOKYO, Aug 24 (Reuters) The Nikkei average fell 1.3 percent on Thursday as shares sensitive to U.S. demand such as Canon Inc.

declined after weak housing data raised concern about consumer spending in a key market for Japanese goods.

Shares of Sony Corp. fell after a brokerage downgrade.

Nippon Steel Corp. rose on a report it would build a new steel plant at a U.S. joint venture with Mittal Steel Nippon Steel said in a statement it is discussing a plan to boost production capacity at its U.S. plant, but no details had been decided.

U.S. existing home sales fell to their lowest level in more than two years, a report showed. The data increased concern about the outlook for the U.S. economy and consumer spending, said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Securities.

''The U.S. economy is heading toward a slowdown, so if it falls too hard that could be a negative surprise for the market,'' Yamagishi said.

The Nikkei was down 210.42 points at 15,952.61 as of 0129 GMT.

The broad TOPIX index was down 1.12 percent at 1,621.92.

Canon fell 2.1 percent to 5,600 yen.

Toyota fell 2 percent to 6,320 yen Both firms, like many Japanese exporters, rely on sales from the U.S. to boost their earnings.

Nippon Steel rose 0.8 percent to 495 yen. The Nihon Keizai newspaper said it would invest 30 billion yen (7.8 million) to build a new auto-use steel sheet plant at a U.S. joint venture with Mittal, the world's largest steel maker, doubling its annual production capacity.

Sony fell 3.1 percent to 5,090 yen after Mitsubishi UFJ Securities lowered its rating on the stock to ''3'' from ''2'', saying the company appears unable to procure enough electronics parts for its new video game console PlayStation 3.

REUTERS VJ BST0724