TOKYO, March 3 (Reuters) - Japan's Nikkei stock average is
likely to fall on Tuesday, with banks such as Mizuho Financial
Group weak as fears deepen about the extent of damage to the U.S.
financial system, with a test of October's 26-year low possible.

U.S. stocks slid to 12-year lows on Monday as embattled
insurer AIG posted a record $61.7 billion loss, the biggest in
U.S. corporate history, and received another government bailout.

"The Nikkei will start weak and probably test 7,000, and
while buying by public pension funds is likely to emerge at the
lows, it will most likely be limited," said Yumi Nishimura,
deputy general manager at the investment advisory section of
Daiwa Securities SMBC.

"Stocks are likely to be weak across the board."

Tokyo trade is likely to be light amid an absence of strong
trading factors during Asian trading time, with some market
players saying the only real hope for global stocks lies in some
sort of fresh U.S. policy for the financial system.

The benchmark Nikkei is likely to trade between 6,900 and
7,200, and could test the Oct. 27 low of 6994.90 -- the lowest
since 1982. The Nikkei closed at 7,280.15 on Monday and last week
fell as low as 7,155.16.

In a sign the market is set to fall, Nikkei futures traded in
Chicago closed at 7,070, down from 7,250 at the Osaka close.
STOCKS TO WATCH

-- Mitsubishi Motors Corp

Mitsubishi Motors said on Monday it will work with PSA
Peugeot-Citroen on its new electric car, the i MiEV, aiming to
sell the car in Europe from the end of 2010 or early 2011.

-- Sekisui House Ltd

Sekisui House said on Monday that group pretax profit will
likely tumble 50 percent to 38.5 billion yen for the business
year ending in January 2010.

-- Toyota Motor Corp

Toyota said on Monday it aimed to boost its market share in
Europe to 6 percent in 2009 from 5.3 percent last year, although
it expects industrywide sales in the region to tank nearly 30
percent to 15 million vehicles.
(Reporting by Elaine Lies; Editing by Chris Gallagher)