(Updates at 0600 GMT)

TOKYO, Aug 19 (Reuters) - Japan's Nikkei share average

fell on Monday, extending losses as the yen strengthened against

the dollar, while retailer Seven & i holdings ( SVNDF ) surged 23% as it

received a takeover bid.

The Nikkei index closed 1.77% lower at 37,388.62,

snapping a five-day winning run that pushed up the index 8.7%

last week.

"The Nikkei was expected to fall this week after its sharp

rally, but the yen's gain against the dollar during the session

pushed that move faster," said Fumio Matsumoto, chief strategist

at Okasan Securities.

"Today's move suggests that the market will remain volatile

for a while."

The U.S. dollar declined broadly and slipped sharply against

the yen in particular as investors bet on a dovish tone emerging

in the Federal Reserve's July policy meeting minutes and Chair

Jerome Powell's upcoming speech at Jackson Hole.

Chip-making equipment maker Tokyo Electron ( TOELF ) slipped

3.11% to drag the Nikkei the most. Robot maker Fanuc ( FANUF )

fell 3.23%.

Bucking the trend, Seven & I holdings ( SVNDF ) surged 23% to

a daily limit high as the company, which operates the 7-Eleven

convenience store chain in the country, said it received a

preliminary takeover offer from Canada's Alimentation

Couche-Tard ( ANCTF ).

Seven & i ( SVNDF ) has formed a special committee to review the

proposal but no decision has been made by either the committee

or board of directors, it added.

Of the 225 Nikkei components, 191 stocks fell and 22 rose,

with one trading flat.

The broader Topix fell 1.4% to 2,641.14, with Toyota

Motor ( TM ) falling 3.06%.