(Updates to midmorning)

TOKYO, Dec 5 (Reuters) - Japan's Nikkei average was flat on Friday, with bank shares sliding on fears about the potential fallout if big U.S. automakers file for bankruptcy although shares of firms reliant on domestic demand found favour.

Chugai Pharmaceutical Co (4519.T: Quote, Profile, Research) plunged more than 10 percent after U.S. regulators asked for more data in their review of key rheumatoid arthritis drug Actemra, being developed by Chugai's partner Roche Holding AG (ROG.VX: Quote, Profile, Research). [ID:nL4463422]

"Concerns have spread that financial institutions including Japanese ones wouldn't be able escape unscathed if big U.S. automakers were to go bankrupt," said Tsuyoshi Segawa, an equity strategist at Shinko Securities.

"We have no idea where and what could happen if a huge corporation like them failed."

As of 0109 GMT, the benchmark Nikkei .N225 fell 0.06 percent or 4.74 points to 7,919.50, after opening slightly higher.

The broader Topix .TOPX dipped 0.3 percent to 786.40.

The chief executives of General Motors Corp (GM.N: Quote, Profile, Research) and Chrysler LLC said they would consider restarting talks about a merger during a nearly six-hour congressional grilling on the industry's pleas for $34 billion in government aid.

No resolution of the auto aid issue is expected until next week at the earliest, when full Congress reconvenes. [ID:nN04392913]