TOKYO, Aug 5 (Reuters) - Japanese stocks tumbled to

their weakest levels since early January on Monday, extending

last week's selloff triggered by the rout in global stock

markets and worries investments funded by a cheap yen were being

unwound.

The Nikkei share average is down 15% in three

sessions and seemed set for its biggest three-day plunge since

2011, as banking stocks led the decline.

It fell as much as 7% to 33,369.37 earlier in the session,

its lowest level since early January, and was last down 5.6% at

33,912.29 as of 1257 GMT.

The broader Topix was down 6.6% at 2,370.18.

The local currency yen, a safe-haven and carry-funding

favourite, traded at 145.43, up 0.8% versus the dollar,

after hitting a mid-January peak of 145.28 in early deals.

The yen is up 10% against the dollar in just over three

weeks, driven in part by the Bank of Japan's interest rate rise

last week and an unwinding of yen-funded carry trades.

U.S. stocks sold off for a second straight session on

Friday, and the Nasdaq Composite index confirmed it was in

correction territory after a soft jobs report stoked fears of an

oncoming recession and expectations for a big Federal Reserve

rate cut in September.

"Domestic equities tanked purely because of the worries that

the U.S. economy may be heading to a recession," said Shoichi

Arisawa, general manager of the investment research department

at IwaiCosmo Securities.

"Today's sell-off was driven by fear that the Wall Street

may fall again later in the day."

Chip-making equipment maker Tokyo Electron tanked 8.4% to

drag the Nikkei the most. Uniqlo brand owner Fast Retailing ( FRCOF )

4% and technology investor SoftBank Group ( SFTBF ) lost

6.9%.

The banking sector fell 12% to become the worst

sector among the Tokyo Stock Exchange's 33 industry sub-indexes.