* Late Wall Street rally fails to lift Tokyo shares
* Softbank, KDDI slip after latest iPhone unveiling
TOKYO, Oct 5 (Reuters) - The Nikkei stock average fell on Wednesday, losing its grip on early gains as bank shares slipped and Fast Retailing Co skidded after posting disappointing sales figures.
Fast Retailing fell 4 percent to 13,350 yen after the company said on Tuesday that same-store sales at its Uniqlo casual-clothing chain in Japan dropped 10.7 percent in September from a year earlier, as hot weather sapped sales of autumn clothes. In the first hour of trading, the issue already traded at about two-thirds of its 30-day average of full-day volume.
The Nikkei was down 0.3 percent at 8,430.04 in midmorning trade. The broader Topix index shed 0.7 percent to 730.90.
"The hopes that lifted U.S. stocks in late trading weren't a reason for Japan to rise, as foreigners continue to sell Japanese shares and the tough situation here is continuing," said Tomomi Yamashita, fund manager at Shinkin Asset Management Co.
Reports that European finance ministers were examining ways of coordinating bank recapitalisation, following the first lender bailout as a result of the crisis of French-Belgian municipal lender Dexia SA, sparked a late rally on Wall Street.
But this rally didn't carry over to Japanese banking shares, with Mitsubishi UFJ Financial Group falling 1.5 percent to 326 yen and Sumitomo Mitsui Financial Group losing 1.2 percent to 2,088 yen.
"There are now hopes that a worst-case scenario in Europe will be avoided, but because this plan is still under consideration and is not formally decided yet, plenty of risks remain," said Fumiyuki Nakanishi, a strategist at SMBC Friend Securities.
Softbank Corp , which has been the sole Japanese distributor of Apple Inc's iPhone, fell 0.2 percent to 2,415 yen after the new iPhone unveiled on Tuesday was greeted with disappointment and criticism.
Shares of KDDI Corp , which will also distribute the latest iPhone, lost 0.7 percent to 554,000 yen. (Reporting by Lisa Twaronite; Editing by Chris Gallagher)