* Nikkei's next target at 8,697, 61.8% retracement
* Hedge fund, foreign selling weighs -analysts
* Authorities' failure to move on yen hurt stocks -analysts
By Aiko Hayashi
TOKYO, Aug 24 (Reuters) - Japan's Nikkei average fell below 9,000 points for the first time in 15 months on Tuesday, with hedge funds and foreigners seen selling as concern mounts over authorities' inaction on a strong yen that threatens the fragile economic recovery.
The 9,000 to 9,100 area had been strong support for the benchmark Nikkei since last year and several attempts this month to break through on the downside had been checked just under 9,100.
If the Nikkei ends the day below 9,000, that will add to downward momentum with few technical targets to break its fall, market players said.
"Selling by hedge funds and European investors appears to be hurting stocks and if the Nikkei goes further below 9,000, unloading by individual investors will also likely accelerate," said Masayuki Otani, chief market analyst at Securities Japan Inc.
"Worries about the economy will not go away overnight, and investors will closely watch what measures emerge, including steps aimed at fending off a so-called double-dip recession in the U.S. economy."
The benchmark Nikkei fell as low as 8,983.52, its lowest since May 2009, before paring losses to 9,008.83, down 1.2 percent on the day.
The broader Topix retreated 0.9 percent to 817.25.
Market players noted disappointment that Prime Minister Naoto Kan and Bank of Japan Governor Masaaki Shirakawa only spoke over the phone on Monday, foregoing a long-expected meeting, with no concrete action to counter yen strength that could hobble Japan's export sector and hit the economy.
ACTION ON CURRENCIES
"While countries around the world are letting their home currencies weaken to protect their economies, Japan isn't doing anything about its currency," said Kenichi Hirano, operating officer at Tachibana Securities.
"Whether that's good or bad is beside the point at this stage, and Japan has to do the same as its peers in the world."
In early Asia trade, the dollar inched down to 85.01 yen, falling towards a 15-year low of 84.72 yen hit earlier this month. The euro slipped to 107.35 yen.
U.S. stocks edged down in one of the lightest volume sessions of the year on Monday as investors took refuge in defensive shares after the latest flurry of corporate M&A activity failed to soothe concerns about the economy.
Analysts said the recent spate of acquisition news was fuelled by corporate profits from cost cutting rather than from revenue growth, and highlighted the economy's weakness.
The Nikkei's next target stands at 8,697, a 61.8 percent retracement of the rally between its March 2009 low and April 2010 high, but few significant targets are seen below that.
"There aren't a lot of natural stopping places, and in some situations we could see it fall in 500-point increments. On the charts, there aren't a lot of good points to watch for either," said Toshiyuki Kanayama, a market analyst at Monex Inc.
But by some technical measures, the Nikkei is starting to look oversold and perhaps due for a bit of a rebound.
Its relative strength index (RSI) fell to 36, with 30 and under considered oversold, while its slow stochastic fell into oversold territory.
The Nikkei also fell near its lower Bollinger Band.
Exporters lost ground, with Sony Corp losing 2.9 percent to 2,427 yen, Canon Inc sliding 1.4 percent to 3,500 yen and Tokyo Electron shedding 2.9 percent to 4,135 yen. (Additional reporting by Elaine Lies; Editing by Edmund Klamann)