* Nikkei sheds 0.8 pct after worst day in 5 mths * Automakers, financials suffer * Correction seen short-lived - strategists By Dominic Lau TOKYO, April 5 (Reuters) - Japan's Nikkei average extended heavy losses made the previous day to fall to a four-week low on Thursday, hurt by a weak Spanish debt auction and fading hopes of further U.S. monetary stimulus. Automakers and financials were under pressure, with Toyota Motor Corp down 2.4 percent, Honda Motor Co off 2.9 percent and Japan's top investment bank Nomura Holdings losing 2.2 percent. "We had a lot of shorts yesterday ... less today, but nobody has stepped in to buy. A lot of the markets aren't open yet, so it doesn't really feel like there are the kind of bids in there to buy stuff," a senior dealer at a foreign banks. He said investors would like to see how the Chinese market reacts after a three-day holiday following disappointing Australian trade figures which have heightened concerns about China's slowing demand for raw materials. The Nikkei dropped 0.8 percent to 9,738.62, on track for its third straight losing day after sliding 2.3 percent on Wednesday, its worst day in five months. But it is still up 15.2 percent this year, buoyed by a run of strong U.S. economic data and liquidity boosting programmes by central banks, and strategists said they expect the current correction to be short-lived. "If equities continue to fall, this could encourage global monetary authorities to adopt a more accommodative stance, thus preventing a worse share price correction than we currently envision," Nomura said in a client note. Naomi Fink, Japan equity strategist at Jefferies, said a bear market relapse was not in the offing. "We remain positive mid-term, and don't anticipate a full-scale flare-up of the Greek crisis, another natural disaster in Japan or a hard landing in China," she said in a note. "Timing-wise, we may be left hanging until the Bank of Japan speaks (dovishly) again." The BOJ will hold a two-day policy meeting next week. Fink recommended investors avoid shorting stocks that retail investors like to buy on dips, such as pharmaceuticals, retailers, information and communications companies, and food and beverage firms. Spanish borrowing costs jumped at a bond auction on Wednesday, raising fears that the euro zone debt crisis may flare up again and suggesting that the effects of a liquidity injection that has bolstered risk assets so far this year may be waning. Euro zone fears and the Federal Reserve's indication that it is less inclined to provide additional stimulus knocked U.S. stocks, with both the Dow Jones industrial average and S&P 500 down 1 percent. The broader Topix index was down 1 percent at 826.83.