* Nikkei below 25-day moving average, bear signal near
* Resource shares battered as oil below $67, copper falls
* Seven & I Holdings down on competition watchdog rebuke
By Elaine Lies
TOKYO, June 23 (Reuters) - Japan's Nikkei average fell 2.8 percent on Tuesday after investors rattled by falls in overseas markets and worry about the global economy moved to unload riskier assets.
Mitsubishi Corp and other resource-linked shares took a battering as oil fell below $67 and copper extended losses on fears about slowing demand, while exporters fell as the yen advanced against the dollar.
Seven & I Holdings was down but off lows after Japan's Fair Trade Commission ordered its convenience store unit Seven-Eleven Japan to stop pressuring franchise outlets not to cut the price of food items nearing expiry dates.
Though markets appeared spooked by a World Bank report that said prospects for the global economy remain "unusually uncertain" and cut 2009 growth forecasts for most economies, some analysts said the grim outlook had been echoed elsewhere and was being used as an excuse for profit-taking.
"Falling simply on the World Bank report seems strange to me, it's like being surprised by old news all over again," Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Securities.
"People used this as an excuse to take profits."
The benchmark Nikkei lost 276.66 points to 9,549.61, at one point falling as low as 9,511.45, its lowest since early June and down over 3 percent.
Trade was moderate, with 2.5 billion shares changing hands on the Tokyo exchange's first section, roughly equal to last week's daily average.
The broader Topix lost 2.3 percent to 901.69.
"I don't think there's as much fund movement based on the end of the quarter or the first half-year as some people say, I think what we're seeing is just investors withdrawing money that poured into the markets on excessive optimism during the recent rally," said Takashi Ushio, head of the investment strategy division at Marusan Securities.
In addition, clouds are gathering on the charts.
The Nikkei has dipped beneath its 25-day moving average -- the Japanese proxy for a month, based on its previous six-day trading week. The 25-day moving average has provided support over the course of the Nikkei's rally since early March.
DEATH CROSS NEAR?
In addition, the Nikkei's 25-day moving average is nearing its five-day moving average and could soon cross above it, a move known as the "Death Cross" that is often a bearish signal. But Yamagishi said a similar pattern appeared in late April, where an apparently imminent Death Cross was avoided at the last moment and instead signalled the bottom of a brief dip. "I actually think the market will probably consolidate with the downside holding around 9,500, and we could see Wall Street rebound today," he said.
Mitsubishi and other trading houses fell after crude oil tumbled below $67 a barrel in the wake of a 4 percent fall on Monday on worries about the global economic recovery.
Copper extended losses on worry that buying by China, the world's biggest consumer of base metals, may dry up after months of record imports.
Mitsubishi lost 5.3 percent to 1,714 yen, Mitsui & Co lost 4.6 percent to 1,111 yen and Itochu Corp lost 3.6 percent to 638 yen.
Oil and gas field developer Inpex Corp fell 4.4 percent to 716,000 yen.
Exporters lost ground as the dollar fell 0.8 percent against the yen to trade at around 95.04 yen.
Toyota Motor Corp lost 2.5 percent to 3,590 yen, Canon Inc slid 2.8 percent to 3,120 yen, and Honda Motor Co fell 1.2 percent to 2,555 yen.
Chipmakers slid, with chip-testing equipment maker Advantest Corp down 5.6 percent to 1,623 yen and TDK Corp losing 4.9 percent to 4,230 yen. Tokyo Electron fell 2.2 percent to 4,390 yen.
Declining shares outnumbered advancing ones by more than 7 to 1. (Editing by Michael Watson)