TOKYO, Aug 6 (Reuters) - Japanese stocks rebounded

sharply in early trade on Tuesday, after their biggest single

day rout since the 1987 Black Monday sell-off in the previous

session.

The Nikkei rallied 8.1% at 34,004.22 as of 0026 GMT,

while the broader Topix was up 8.57%.

The Nikkei plunged 12.4% on Monday in its worst performance

since the October 1987 crash, as investors were shaken by last

week's plunge in global stock markets, U.S. recession risks and

worries investments funded by a cheap yen were being unwound.

Monday's collapse was a "reminder that it is

next-to-impossible to diversify equity risk by region (or by

sector or style) during major corrections or bear markets," said

Stephen Dover, chief market strategist and head of Franklin

Templeton Institute at Franklin Templeton.

"Opportunity will arise, but in our view, it is premature to

step in at this point."