TOKYO, Aug 15 (Reuters) Tokyo's broad TOPIX index hit its lowest in more than eight months on Wedne

TOKYO, Aug 15 (Reuters) Tokyo's broad TOPIX index hit its lowest in more than eight months on Wednesday as investors sold financial shares such as Mitsubishi UFJ Financial Group Inc. and exporters after a wave of credit worries hit U.S. stocks overnight and the yen strengthened.

Matsushita Electric Industrial Co Ltd. tumbled 5.4 percent to 2,005 yen after Nokia warned consumers on Tuesday that 46 million batteries used in its mobile phones could overheat and offered to replace them free while it negotiates with battery maker Matsushita over who will bear the cost.

''Technically the market has completely bottomed out, but frankly, credit worries seem more deep-rooted than initially thought and they have not been wiped out,'' said Katsuhiko Kodama, a senior strategist at Toyo Securities.

''But the recent violent position adjustments by hedge funds seem to be over. Still, the U.S. market needs to calm down for stocks here to go back to normal.'' As of 0116 GMT, the TOPIX shed 1.7 percent or 27.45 points to 1,610.01, after earlier falling more than 2 percent, logging its lowest level since Dec. 6, 2006.

The benchmark Nikkei average was down 1.5 percent or 247.73 points at 16,596.88.

The dollar was little changed at 117.45 yen hovering within sight of a four-month low of 117.19 yen touched last week.

Major banks and other financial stocks continued a slide on renewed concerns about global credit markets after Sentinel Management Group Inc., which oversees about $1.6 billion in assets, told clients it wants to stop investors from withdrawing their cash to avoid credit concerns.

Shares Mitsubishi UFJ gave up 6.1 percent to 1.07 million yen.

It suffered an appraisal loss of 5 billion yen ($42.42 million) on its investment in U.S. subprime loan-related financial products. Its outstanding balance of investment in such products stood at 280 billion yen as of July.

Toyo's Kodama said even after the announcement of the appraisal loss, investors seem be still concerned about the scale of damage to Japanese banks from problems in the U.S. subprime mortgage sector, as stocks had continued falling since July.

Exporters fell, with Sony Corp. down 2.1 percent at 5,550 yen, while Honda Motor Co. declined 2.5 percent to 3,930 yen.

Reuters SBA VP0712