* FOMC, BOJ eyed this week
* Exporters, oil shares, banks fall sharply
* Toshiba falls to 36-year low as selloff continues
By Ayai Tomisawa
TOKYO, Jan 26 (Reuters) - Japan's Nikkei share average tumbled more than 2 percent on Tuesday morning, following Wall Street, as a renewed slump in oil prices unnerved investors and had cyclical stocks retreating after strong gains over the past two days.
The Nikkei dropped 2.1 percent to 16,755.77 in midmorning trade after rising to a one-week high on the previous day.
All of the Topix's 33 subsectors fell, with oil shares underperforming. Inpex Corp dropped 4.1 percent and Japan Petroleum Exploration shed 4.3 percent.
Crude oil prices fell as much as 6.7 percent on concerns of oversupply after news that Iraq's output reached a record last month.
Traders said that investors are focused on the outcome of the U.S. Federal Reserve's two-day meeting starting Tuesday as well as the Bank Of Japan's meeting later in the week.
"We expect a few more days of unstable markets," said Hikaru Sato, a senior technical analyst at Daiwa Securities, noting that cyclical stocks such as financials, exporters and steelmakers were being sold as investor risk aversion returned.
Mitsubishi UFJ Financial Group fell 3.8 percent, while Sumitomo Mitsui Financial Group declined 3.1 percent. Nippon Steel & Sumitomo Metal stumbled 3.2 percent and JFE Holdings dived 4.6 percent.
Exporters were hammered as well, with Toyota Motor Corp falling 2.4 percent and Honda Motor Co shedding 2.6 percent.
Toshiba Corp tumbled 4.5 pct to 199.8 yen, the lowest since 1980, according to Thomson Reuters data.
A selloff in Toshiba shares continued a day after the Mainichi Shimbun newspaper reported that Toshiba may post impairment costs of around 160 billion yen ($1.35 bln) related to Westinghouse, its U.S. nuclear power unit, on earnings for the fiscal year ending March.
The broader Topix dropped 1.8 percent to 1,367.48 and the JPX-Nikkei Index 400 fell 1.8 percent to 12,338.33.
Reporting by Ayai Tomisawa; Editing by Eric Meijer