* Key index falls to -58, lowest since March
* Strong yen, economic outlook worries hurt sentiment
* More than half respondents expect lower winter bonus
* Many to park winter bonus in deposits
By Chikafumi Hodo and Mari Terawaki
TOKYO, Nov 24 (Reuters) - Japanese retail investor sentiment towards domestic stocks fell for the third straight month to an eight- month low in November as Japan's shares lagged recoveries in other countries, a Reuters survey showed on Tuesday.
A higher yen, lingering uncertainties about the U.S. economy and concerns over the policies of the three-month-old Japanese government continued to cast doubt over the outlook for the domestic economy and share prices.
More than half the survey's respondents also said they expected to get a smaller bonus this winter, which could add to deflationary pressure in Japan.
"Some improvements have been seen in economic data, but unemployment is not getting better, so I have concerns over the real economy," said an investor in his 30s.
The survey's investor sentiment index fell 26 points to minus 58 in November from the previous month.
The drop is the biggest month-on-month fall since July 2008 when it declined by 30 points to minus 50.
The key index has fallen substantially since it reached a two-year high of minus 10 just three months ago.
The index is calculated by subtracting the percentage of investors who say they are bearish from those who are bullish.
The survey, to which 598 people responded, was conducted during Nov. 9-12, when the Nikkei share average was under downward pressure and hovered slightly above 9,800.
Japan's economy grew at the fastest pace in more than two years in the third quarter as stimulus lifted consumer spending and capital spending rose, government data showed last week.
The economy grew 1.2 percent in July-September from the previous quarter. That marked the largest gain in gross domestic product since a 1.4 percent rise in January-March 2007 and compares with a revised 0.7 percent expansion in April-June, which was the first growth in five quarters.
Japan's National Strategy Minister Naoto Kan said on Friday, however, that the government wants the Bank of Japan's cooperation in fighting deflation.
The survey showed that retail investor sentiment deteriorated in various sectors.
The sentiment index for material stocks, such as steel and oil companies, dropped to minus 28 in November from being flat the previous month.
The index for high-tech and electronic shares fell by 40 points from October to minus 28.
"Domestic consumption is falling and fears over deflation are increasing," said an investor in his 50s. "A higher yen is hurting manufacturers and leading to job cuts."
The survey showed that 56.7 percent of respondents expected to receive smaller bonus payouts this winter compared with a year earlier, while only 7.2 percent said they expected to get bigger bonuses. The rest of the respondents said they did not belong to businesses in which they would get a bonus.
Nearly half the respondents that expected to receive bonuses said they would put these into savings.
"As I'm not expecting my income to rise in the future, I need to save for the future. I need to set up a lifestyle suited for a lower income," another investor in his 50s said.
The monthly poll, which is conducted anonymously, aims to capture the view of readers of an online magazine aimed at users of the Reuters Japan Web site http://www.reuters.co.jp (Editing by Joseph Radford) ((chikafumi.hodo@thomsonreuters.com; +81-3-6441-1855; Reuters Messaging: chikafumi.hodo.reuters.com@reuters.net)) ((If you have a query or comment on this story send an email to news.feedback.asia@thomsonreuters.com))