By Aiko Hayashi

TOKYO (Reuters) - The Nikkei average fell 0.6 percent on Thursday, dragged lower by Komatsu (6301.T: Quote, Profile, Research) and Denso (6902.T: Quote, Profile, Research) as investors punished companies with disappointing earnings which sparked concerns about the broader economic outlook.

But investors picked up stocks more reliant on the domestic economy such as Fast Retailing (9983.T: Quote, Profile, Research) amid fears of a global economic slowdown, while energy-linked shares rose on a jump in oil prices.

"The focus of trade is shifting toward defensive sectors or stocks that are less affected by external factors, rather than those of a cyclical nature," said Takahiko Murai, general manager of equities at Nozomi Securities.

"Komatsu's earnings rather shocked the market. Komatsu, which is supported by demand in emerging countries, was a bellwether cyclical stock. Investors were forced to admit that the global economy had slowed more than expected."

Construction machinery maker Komatsu booked a 2 percent gain in quarterly profit on Tuesday, but slashed its unit-based demand forecast for the U.S., European and Japanese markets.

The benchmark Nikkei .N225 shed 78.93 points to end the morning session at 13,288.86, while the broader Topix .TOPX declined 1 percent to 1,290.37.

U.S. stocks rose on Wednesday as a surprising increase in private-sector employment and central bank efforts to boost liquidity in stormy financial markets offset a surge in oil prices. .N

Masayoshi Okamoto, head of dealing at Jujiya Securities, said investors are turning sour on exporters as they expect the U.S. and European economies will further erode in the latter half of this year.