(Adds comments, updates stock prices)

By Junko Fujita

TOKYO, Aug 26 (Reuters) - Japan's Nikkei share average

fell to a two-week low on Tuesday, as the yen strengthened after

U.S. President Donald Trump fired Lisa Cook, the first

African-American woman to serve as a Federal Reserve governor.

As of 0201 GMT, the Nikkei dropped 1% to 42,362.99,

its lowest since August 12.

The broader Topix lost 0.95% to 3,075.95%.

"The market was surprised with the news about Cook and

reacted accordingly," said Shuutarou Yasuda, a market analyst at

Tokai Tokyo Intelligence Laboratory.

"Also, investors calmed down from the previous session, in

which optimism about the Federal Reserve's policy loosening

boosted equities. We will have to wait for more data until the

Fed's policy decision."

Wall Street stocks ended lower as investors parsed the U.S.

interest rates outlook and looked ahead to AI chipmaker Nvidia's ( NVDA )

quarterly earnings this week.

The yen rose about 0.3% to 147.28 against the

U.S. dollar after Trump took the unprecedented action of firing

Cook over claims of mortgage borrowing impropriety.

A stronger yen typically weighs on exporters' shares by

reducing the value of overseas earnings when converted back into

Japanese currency.

Toyota Motor ( TM ) and Honda Motor ( HMC ) slipped

1% and 1.86%, respectively.

Uniqlo brand owner Fast Retailing ( FRCOF ) lost 1.69%, while

chip-related heavyweights Advantest ( ADTTF ) and Tokyo Electron ( TOELF )

shed 1% and 0.49%, respectively.

Online medical services operator M3 rose 1.49%

to lend the biggest boost to the Nikkei.

All but one of the Tokyo Stock Exchange's 33 industry

sub-indexes fell. The utility index retreated 2.4% to

become the worst performer.

Investors, who were late on catching up with the Nikkei's

latest rally, seemed to have been buying stocks on dips, which

is limiting the declines, Yasuda said.