* Nikkei drops below immediate support level at 25 MA
* Impact of Nintendo drop limited on overall market-analyst
* Carmakers skid on report of output cut impact
By Ayai Tomisawa
TOKYO, April 26 (Reuters) - Japan's Nikkei average fell nearly 1 percent on Tuesday, dropping below a key support level as exporters were hit by a stronger yen, though investors held off from trading aggressively ahead of corporate earnings announcements.
Shares of Nintendo Co fell 3.7 percent to 19,530 yen after the game maker on Monday reported its second straight fall in annual profit, hurt by slowing sales of its ageing Wii console, but analysts said the impact on the broader market should be limited.
"There are more earnings coming up, and the market is also carefully awaiting the outcome of the Federal Reserve meeting this week," said Hiroichi Nishi, general manager at SMBC Nikko Securities.
Federal Reserve Chairman Ben Bernanke will hold the first news conference ever by a Fed Chief after an interest rate decision on Wednesday, and market participants will be monitoring his comments for hints at future policy tightening.
The benchmark Nikkei was down 0.9 percent at 9588.84, while the broader Topix index fell 0.8 percent to 833.93.
Analysts said the Nikkei's support is now pegged at the psychological line of 9,500, after the index dropped below previous support at its 25-day moving average of 9,608.
Auto shares fell after the Nikkei business daily said that last month's huge production cuts will translate into roughly 1 trillion yen in lost revenues for Toyota Motor and other Japanese automakers, citing its own estimates.
Toyota dropped 1.7 percent to 3,220 yen and Honda Motor shed 1.6 percent to 3,055 yen.
"Carmakers are being hit by the double-whammy of the article and a stronger yen, but such drops may be priced in the market soon as investors will likely focus on their earnings," said Kenichi Hirano, a strategist at Tachibana Securities.
Exporters fell the dollar dropped to a four-week low against the yen . Sony Corp lost 1.6 percent to 2,427 yen and Toshiba Corp shed 1.2 percent to 423 yen. (Additional reporting by Chikafumi Hodo; Editing by Chris Gallagher)