* Worries about the financial sector weigh on overall market
* Trade cautious on policy uncertainty, before 5-day holiday
TOKYO, Sept 18 (Reuters) - Tokyo's Nikkei average fell 0.8 percent on Friday, hurt by financial shares after consumer finance firm Aiful Corp said it would ask creditors to push back repayments, rekindling concerns about the ailing sector.
Shares in Aiful's main creditors such as Sumitomo Trust and Banking Co and Aozora Bank fell, while recent gainers such as Advantest Corp lost steam after U.S. stocks took a breather following a rally.
"Investors don't really want to touch financial shares. The Aiful news came as a slight shock as that means bankruptcy, which added to uncertainty in the sector that already existed about the new government's policies," said Kenichi Hirano, operating officer at Tachibana Securities.
Shizuka Kamei, the new minister for banking and market regulation, has said he would like to introduce a moratorium on some loan repayments to help small and midsized businesses and individuals struggling from the economic downturn, sending bank shares lower.
The benchmark Nikkei slipped 88.15 points to 10,355.65, after gaining 1.7 percent the previous day to hit a one-week closing high.
The broader Topix fell 0.9 percent to 931.42.
Trade was also cautious ahead of a five-day holiday from Sept. 19-23 in Japan, market players said.
Aiful was untraded due to a glut of sell orders at 134 yen, down 27.2 percent from Thursday's close.
Aiful said it would ask creditors to push back repayments on about $3 billion in debt as it faces difficulty raising funds and plans for more restructuring.
Shares of Sumitomo Trust and Banking shed 4.2 percent to 457 yen, while Aozora Bank tumbled 5.9 percent to 127 yen.
The other financial subindex, which lost 5.8 percent, and banking subindex, which slid 2.5 percent, were some of the top percentage decliners among subindexes.
Exporters that have gained sharply lost ground to also weigh on the overall market. Advantest Corp slipped 1.5 percent to 2,375 yen and Kyocera Corp retreated 1.2 percent to 8,050 yen. ($1=91.00 Yen) (Reporting by Aiko Hayashi; Editing by Michael Watson)