(Updates to midmorning)

TOKYO, July 10 (Reuters) - The Nikkei stock average fell 0.7 percent on Thursday, led by exporters such as Kyocera Corp (6971.T: Quote, Profile, Research) following a steep drop on Wall Street on growing worries about the economy and credit problems.

Bank shares were mixed, with top lender Mitsubishi UFJ Financial Group (8306.T: Quote, Profile, Research) rising 0.9 percent while No. 2 Mizuho Financial Group (8411.T: Quote, Profile, Research) lost 1 percent.

Market analysts said the Tokyo market, which pared most of its earlier gains on Wednesday after news of an Iran missile test, was unlikely to fall sharply as one of investors' biggest worries had not materialised.

"There were fears about a jump in oil prices after Iran's missile test, but they didn't change much, and forex moves are also relatively calm," said Norio Shimura, deputy head of the equity department at Chuo Securities.

"Given U.S. stocks' falls, we are seeing selling this morning, but after that runs its course, the Nikkei might even regain ground back to 13,000," he said.

As of 0040 GMT, the benchmark Nikkei .N225 had fallen 95.45 points to 12,962.24. The broader Topix .TOPX lost 0.4 percent to 1,279.89.

U.S. stocks tumbled on Wednesday, dragging the S&P 500 into a bear market, as worries about more credit losses hurt financial companies and Cisco Systems (CSCO.O: Quote, Profile, Research) led technology shares lower after its CEO raised fears of an extended economic downturn.

High-tech parts maker Kyocera fell 2.1 percent to 9,150 yen, the biggest drag on the Nikkei.