* Nikkei falls 2.1 pct, Topix down 2 pct
* Global political worries, firmer yen hit blue-chips
* Hedge funds take profits before PM Abe's tax decision
By Tomo Uetake
TOKYO, Sept 30 (Reuters) - Japan's Nikkei average shed more
than 2 percent on Monday morning as blue-chip exporters and
financials lost ground after concerns over a possible U.S.
government shutdown and Italy's political crisis sent the dollar
to a one-month low against the yen.
The benchmark Nikkei was down 2.1 percent, or 315.34
points, at 14,444.73 in midmorning trade, on track for its
biggest one-day fall since Aug. 20. But it is still up 8 percent
this month, heading for its first monthly gain in five months.
"Hedge funds are shorting recent gainers to lock in profits
ahead of a big day tomorrow, when the prime minister will
deliver his long-awaited decision," said Kyoya Okazawa, head of
global equities and commodity derivatives at BNP Paribas in
Tokyo.
Prime Minister Shinzo Abe is expected to make an
announcement about the government's economic growth and tax
strategy on Tuesday.
Global investors were wary after political wrangling in the
U.S. Congress over the weekend made it increasingly unlikely
that Republicans and Democrats will agree to fund the government
before the fiscal year ends at midnight on Monday.
In Italy, Prime Minister Enrico Letta said he would go
before parliament on Wednesday for a confidence vote after
ministers in Silvio Berlusconi's centre-right party pulled out
of his government at the weekend.
"Ahead of major event risk, U.S. political gridlock provided
a good excuse for traders to do some profit-taking, but I think
some investors will see the declines as dip-buying
opportunities," Okazawa added.
The dollar fell as low as 97.53 yen on trading
platform EBS early Monday, its weakest level against the yen
since Aug. 29.
A firmer yen tends to make Japanese exports less competitive
in the global market.
Toyota Motor Corp dropped 2.5 percent and was the
third-most traded stock by turnover on the main board. Honda
Motor Co Ltd and Mitsubishi Motors Corp shed 3
percent and 2.7 percent, respectively.
The broader Topix dropped 2 percent to 1,193.42.
Mizuho Financial Group dropped 3.6 percent after
the banking regulator chided its banking unit for failing to
take sufficient action against loans it had extended to members
of organised crime networks. It was the second
most-traded stock.
Other financials were also weak, with Nomura Holdings Inc
dropping 3.7 percent and Mitsubishi UFJ Financial Group
Inc slipping 2.8 percent.
The benchmark Nikkei is still up 39 percent this year.