* Nikkei flat, Topix down 0.1 pct * Argentine's default, Portugal bank woe hit financials despite limited exposure * U.S. job creation slows, unemployment rate rises * Heavyweight SoftBank tumbles on Iliad's T-mobile bid * Hopes for domestic earnings lend some support By Tomo Uetake TOKYO, Aug 4 (Reuters) - Japanese stocks were flat on Monday after slipping to a one-week low in choppy early trade, as more losses on Wall Street and the conflict in Gaza and Ukraine sapped risk appetite.
Heavyweight SoftBank Corp extended its losses, tumbling 3.4 percent and was the most-traded stock by turnover on the main board at the morning break.
The stock has come under pressure after French telecommunications company Iliad SA made a surprise offer for T-Mobile US Inc last week, setting up a potential bidding war with Sprint Corp, the U.S. mobile carrier now controlled by Softbank..
The benchmark Nikkei dropped for a third straight day on Monday to as low as 15,440.21 - its weakest level since July 28 - before erasing much of the losses to stand flat at 15,528.45.
U.S. stocks ended lower on Friday, with the S&P 500 posting its biggest weekly decline in two years, led by losses in financial shares on persistent concerns over Argentina's debt default and problems at the biggest bank in Portugal.
"The fact that U.S. financial shares fell sharply even though they have very limited exposure to Argentine and Portugal suggests just how markets are getting nervous about high valuations," said Yasuo Sakuma, portfolio manager at Bayview Asset Management.
Japanese financial shares followed suit, with securities and banking leading the top three decliners on the Topix subindexes, each losing 1.1 percent.
Mitsubishi UFJ Financial Group fell 1.7 percent while Nomura Holdings dropped 1.3 percent.
Tensions in the Middle East and Ukraine also offset some helpful U.S. rate implications for equities from Friday's U.S. jobs data.
U.S. job growth came in slightly below consensus and slowed in July, while the unemployment rate unexpectedly rose, pointing to slack in the labour market that could give the Federal Reserve room to keep interest rates low for a while.
Still, underlying hopes of an improvement in domestic corporate earnings continued to support Japanese equities.
The April-June quarter earnings season, which has been in full swing for a few weeks now, has largely provided encouraging reading on Corporate Japan's health.
"We have passed the peak of earnings season. It is becoming increasingly clear earnings forecasts were too timid - and valuations too low," CLSA Japan strategist Nicholas Smith wrote in a research note on Friday.
That sentiment was echoed by Astellas Pharma Inc and Rohm Co Ltd, which climbed 3.3 percent and 6.3 percent respectively, after posting solid earnings.
The broader Topix shed 0.1 percent to 1,280.60, while the JPX-Nikkei Index 400 ended the morning session almost flat at 11,658.33.
(Editing by Shri Navaratnam)
