* Shares in Nintendo drop 2 pct, vs 0.7 pct fall in Nikkei
* Miyamoto creator of top-selling Mario, Zelda games
* Mario software has helped boost 3DS sales in Japan
* Nintendo struggling after product flop, yen rise (Adds comments from book author)
By Isabel Reynolds
TOKYO, Dec 8 Nintendo Co Ltd on Thursday denied a report that Shigeru Miyamoto, widely seen as the world's most influential games designer, would step down from his current position and take a smaller role in the company.
Wired magazine had quoted the 59-year-old creator of popular games franchises including Super Mario Bros and The Legend of Zelda as saying in an interview that he wanted to retire and work on smaller projects, passing the torch to younger designers.
"This is absolutely not true," said a spokeswoman for Nintendo. "There seems to have been a misunderstanding. He has said all along that he wants to train the younger generation.
"He has no intention of stepping down. Please do not be concerned."
Shares in Nintendo fell 2 percent to 11,040 yen on Thursday, compared with a 0.7 percent drop in the Nikkei average.
Any sign that the company might lose Miyamoto would be a fresh blow for Nintendo, which dominated the games industry for years with its Wii consoles and DS handheld devices.
"He is a rockstar in video game and console development," said Dan Sloan, the author of a book on the secretive Kyoto firm.
Nintendo has been struggling since its new generation 3DS device flopped shortly after its February launch, amid harsh competition from smartphones and tablets, while economic uncertainty in Europe and the United States will likely deal a fresh blow in the all-important year-end shopping season.
The yen's strength against the dollar and euro has also crushed the value of profits repatriated from overseas markets.
Miyamoto's influence over the industry has been such that analysts often ask about his latest hobbies to try to glean ideas about what games he might work on next. The report of his retirement sparked a flood of messages on Twitter and tech blogs.
"Inside our office, I've been recently declaring, 'I'm going to retire, I'm going to retire," the Wired.com website quoted Miyamoto as saying, via an interpreter.
"I'm not saying that I'm going to retire from game development altogether. What I mean by retiring is retiring from my current position."
The firm was forced to slash the price of its 3DS by about 40 percent six months after launch, and cut its forecast to a net loss for the year. Markets also reacted negatively to the unveiling of the successor to the Wii at the E3 games show in June.
The launch of a raft of new software, including Mario titles, has propped up 3DS sales, at least in Japan, President Satoru Iwata said in an interview with the Nikkei business daily this week. But he also noted that U.S. and European consumers seemed to be delaying year-end spending.
Even if Miyamoto is not ready to step down yet, some point out it may be time for the company to move on.
"Whether the report is true or not, speculation has been growing that Nintendo needs a next generation to take the mantle held by Miyamoto and Iwata over the past decade," said Sloan. (Editing by Joseph Radford and Muralikumar Anantharaman)
Our top photos from the past week.