* Strong yen exacerbates already sour mood - analyst * Exporters hit by yen strength * Fed stimulus outlook key for market direction - analyst By Ayai Tomisawa TOKYO, May 30 (Reuters) - The Nikkei share average fell more than 3 percent to break below 14,000 on Thursday morning as the dollar dropped to its lowest level against the yen in nearly three weeks, triggering a sell-off in exporters. The benchmark Nikkei fell 3.0 percent to 13,949.05 in mid-morning trade after dropping as low as 13,879.93. Exporters came under early selling pressure after the dollar dropped as low as 100.585 yen in early Asia, its lowest level since May 10. Honda Motor Co dropped 2.1 percent, Sony Corp fell 1.7 percent and Komatsu Ltd shed 1.1 percent. The Topix dropped 1.5 percent to 1,162.19. Analysts said the rising yen further dented already depressed sentiment after U.S. stocks weakened overnight on ongoing fears that the Federal Reserve might soon begin scaling back its massive stimulus programme. Investors have remained on edge since last Thursday when the Nikkei plunged 7.3 percent, its worst single-day loss since the March 2011 earthquake and tsunami. The subsequent days have also seen some extreme volatility, with a rebound in the yen, the Fed stimulus worries and a slowdown in China making investors uneasy. "The rising yen is just a minor reason that triggered further selling. The fundamental concern that's been in investors' heads is the possibility that the Fed is exiting from quantitative easing," said a fund manager at a U.S. hedge fund. Analysts expect volatility in Japanese equities to persist over the next few weeks, with U.S. economic data closely watched for clues on how they could affect the Fed's exit strategy and foreign exchange markets. "People are worried that a winding down of quantitative easing could end the generous supply of money, leading to a surge in interest rates and a downturn in stock prices and economies," Ryoji Musha, president of Musha Research wrote in a report. The Nikkei is up 14 percent since April 4, when the Bank of Japan announced a sweeping monetary expansion campaign to eradicate years of deflation and revive growth. The aggressive stimulus pursued by the central bank and government has driven the index up 35 percent so far this year.