By Taiga Uranaka

TOKYO (Reuters) - The Nikkei average fell 1.5 percent on Tuesday, with financial shares sliding as worries about the U.S. credit market mounted while automakers were hurt after Toyota Motor (7203.T: Quote, Profile, Research) cut its global sales forecast.

Nippon Steel Corp (5401.T: Quote, Profile, Research) fell after a fire broke out on Tuesday at one of its plants in southwest Japan, forcing the world's second-biggest steelmaker to halt some blast furnace operations.

As investors grew jittery about the potential for more credit and housing market turmoil to inflict further damage on the U.S. economy and global economic outlook, exporters like Canon (7751.T: Quote, Profile, Research) skidded.

"In a sense, the situation could be more troublesome now than February and March. Instead of intense worry like (the near collapse of) Bear Stearns, things are getting worse gradually," said Toshio Sumitani, general manager at Tokai Tokyo Research Center.

"Also differing from that time, the negative impact is spreading beyond the financial sector to manufacturers," he said.

Japanese corporate earnings season is well under way, with Sony (6758.T: Quote, Profile, Research), Matsushita Electric Industrial (6752.T: Quote, Profile, Research), Nomura Holdings (8604.T: Quote, Profile, Research) and Toshiba (6502.T: Quote, Profile, Research) among major firms announcing results after Tuesday's close.

While there have not been many surprises so far this reporting season as investors had already expected weak earnings, the lack of positive news has disappointed some investors.

"In Japan, the macroeconomic situation is getting weak and exports are also slowing down. So what will lead the market?" said Naoteru Teraoka, general manager of the investment management division at Chuo Mitsui Asset Management.