TOKYO, April 15 (Reuters) - Japan's blue-chip Nikkei

index dropped nearly 1% on Monday as investors sold equities

following an escalation of violence in the Middle East and a

sell-off on Wall Street at the end of last week.

Shares in Japanese banks and brokerages slid following

lacklustre earnings reports from the likes of JPMorgan Chase ( JPM )

and Wells Fargo ( WFC ), while local chip-sector stocks

also tracked their U.S. peers lower.

Domestic earnings produced some outsized losers as well,

with drugmaker Astellas and department store operator

Takashimaya ( TKSHF ) tumbling close to 6% each.

The Nikkei lost 0.97% to 39,138.22 as of 0207 GMT,

though that was well off early losses of as steep as 1.78%.

The broader Topix sagged 0.37%.

An already sombre backdrop from losses of more than 1%

across the major Wall Street benchmarks on Friday became even

more gloomy after Iran launched an unprecedented attack on

Israeli territory over the weekend.

"The risk-off mood is really pushing down on Japanese

equities," said Kazuo Kamitani, an equities strategist at Nomura

Securities.

However, with the Nikkei's 25-day moving average set to move

upwards from Tuesday as higher prices from before March 8 factor

out, the technical picture is due to turn more positive,

Kamitani said.

"Even though losses today probably can't be helped, from

tomorrow onwards, Japanese stocks can turn higher," he said.

Of the Nikkei's 225 components, 181 fell versus 44 that

rose.

Chip-making equipment giant Tokyo Electron ( TOELF ) was the

biggest drag by index points with a 1.32% decline. Chip-testing

machinery maker Advantest ( ADTTF ) dropped 2.19%.

Daiwa Securities ( DSECF ) was the worst-performing financial

stock on the Nikkei, down 1.82%. Securities firms

were among the worst-performing industry groups on the Tokyo

Stock Exchange, dropping 1.2%. Banks fell 0.74%.

Astellas pulled pharma to the bottom of the list,

with a 1.89% slide for the sector.

Meanwhile, shippers and oil companies

rose amid escalating Middle East tensions, adding 1.03% and

0.53% respectively.