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* Nikkei may be volatile next week - analyst * Nikkei stays below major support lines * Nikkei may hit 8,500 before it picks up - analyst By Ayai Tomisawa TOKYO, Nov 9 (Reuters) - Japan's Nikkei share average fell on Friday, extending declines into a fifth day as looming U.S. fiscal woes and European economic worries have strengthened the yen and dragged down exporters. Key concerns for investors include the U.S. fiscal cliff - $600 billion in spending cuts and tax increases due to take effect early next year, as well as few signs of progress in Europe's debt crisis. The prospect of U.S. political wrangling over the fiscal cliff has deepened uncertainty for investors, who have sold stocks on expectations that taxes on capital gains and dividends will go up. "This is a major concern for investors and the market may fall further next week when Congress reconvenes on November 13," said Eiji Kinouchi, chief technical analyst at Daiwa Securities. Kinouchi said Japan's stock market could face further pressure and volatility next week as U.S. markets are quite likely to fall as some companies go ex-dividend, adding that investors should watch U.S. stocks with high dividend yields such as power companies. The Nikkei dropped 0.9 percent to 8,759.63 in early afternoon trade. It is trading below its 25-day moving average of 8,864.17 and its 13-week moving average at 8,874.71. The re-emergence of macro-economic concerns comes amid a weak quarterly earnings season that has seen many companies cut their annual guidance. "Investors were overly optimistic that they had thought that the market would price in the U.S. election result and would buy Japanese stocks whose valuations are cheap," said Masatoshi Sato, a senior strategist at Mizuho Investors Securities. "It's too early to price in all the negative factors. The market may not pick up unless the index hits bottom around a psychological support level of 8,500." The euro is trading near one-month lows against the yen, under pressure after ECB President Mario Draghi said the euro zone economy showed little sign of recovering before the year-end despite easing financial market conditions. The broader Topix index fell 0.7 percent to 729.91. Carmakers and electronics makers led losses, with Toyota Motor Corp, Honda Motor Co, Toshiba Corp and Nikon Corp declining between 1.0 percent to 1.8 percent. Nexon Co Ltd slumped 16 percent to 770 yen, hitting a record low of 766 yen at one point, after the online game provider cut its full-year operating profit forecast for the year ending December. Tsumura & Co surged 6.7 percent to a 28-month high after the manufacturer of Chinese medicine raised its full-year operating profit forecast and annual dividend estimate, citing better sales.