* Nikkei should see support at 25-day moving average - analysts * Yahoo Japan, Advantest disappoint market * CPI seen positive but failed to support decline By Ayai Tomisawa TOKYO, July 26 (Reuters) - Japan's Nikkei share average fell to a two-week low on Friday morning, as selling accelerated on the back of a firmer yen and disappointing quarterly earnings from the likes of Canon Inc and Advantest Corp . The Nikkei fell 1.9 percent to 14,288.92 in mid-morning trade after slipping to a low of 14,236.46 earlier, the lowest level since July 9. Analysts said that the Nikkei's immediate support is seen at its 25-day moving average of 14,119.61. The first-quarter earnings season is at its peak, with more blue chips reporting their results next week. Analysts said that investor sentiment has turned sour on the results after companies like Canon and Shin-Etsu Chemical Co disappointed the market on the previous day. Canon extended its losses, down 1.9 percent. On Friday, Yahoo Japan Corp fell as much as 5.7 percent after the company Posted worse-than-expected earnings. Advantest tumbled 8.7 percent after reporting an operating loss of 3.32 billion yen for the April-June quarter. Exporters took a hit as the yen rose against the dollar, with Toyota Motor Corp falling 2.0 percent, Sony Corp dropping 1.8 percent and Honda Motor Co shedding 2.1 percent. Market players said that investors are reluctant to take large positions for now. "Trading may be led by futures as many investors are reluctant to take positions in the cash market until they see all the earnings outcomes," said Yutaka Miura, a senior technical analyst at Mizuho Securities. Investors will also watch to see whether the dollar holds above 99 yen during the day, given a greater focus on dollar-yen levels as exporters release their results. A weak yen lifts exporters' competitiveness overseas as well as their profits when repatriated. "Since the weak yen has been a major factor to buy into the Japanese market, exporters' first quarter earnings will likely drive investor sentiment from now on in deciding whether they want to buy more or retreat," said Hikaru Sato, senior technical analyst at Daiwa Securities. The dollar last traded at 99.25 yen. The Topix dropped 1.7 percent to 1,181.34, with 32 of its 33 subsectors in negative territory. Before the market opened, Japan's June core consumer price index came in at 0.4 percent, just above forecasts for 0.3 percent. Economists said the data was positive for the stock market in the mid to long term. "The rise in the CPI is mainly due to the weaker yen, which is raising import costs, so it's too early to be overly optimistic. But we can say that 'Abenomics' is very much in play," said Nobuhiko Kuramochi, strategist and economist at Mizuho Securities. The Nikkei has dropped around 10 percent from the year's peak at 15,942.60 hit on May 23, but it is up 38 percent this year on the back of the weaker yen as Prime Minister Shinzo Abe continues to drive an aggressive policy mix of fiscal and monetary stimulus.
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