(REUTERS) -- Japan's Nikkei average fell to a one-month closing low on Monday after downgrades of nine European countries, including a cut in France's triple-A rating, escalated fears over the region's ability to end its debt crisis.

Adding to market unease was an impasse in negotiations between Greeceand private creditors on a debt swap deal, raising the risk of a Greek default in March when massive bond payments are due.

Now markets are worrying about a possible downgrade of European banks and the region's bailout fund, which would make it even harder to raise capital, said Fumiyuki Nakanishi, general manager of investment and research at SMBC Friend Securities.

It's as if Europe is in a dark spiral where people are discussing the worst case scenario for the euro zone, he said.

Against this backdrop, Japan's construction subindex .ICNST.T outperformed the broader market as investors remained bullish that the sector would benefit from post-quake reconstruction spending.

Among construction companies, Taisei Corp (1801.T) climbed 1 percent to 206 yen, Kajima Corp (1812.T) gained 1.2 percent to 250 yen and Obayashi Corp (1802.T) advanced 0.6 percent to 359 yen.

The three companies carried a 12-month forward price-to-earnings ratio of between 14.4 and 16.3, data from Thomson Reuters Datastream showed. That compared with the construction sector's 11.6 and the broader Topix's.TOPX 11.4.

Among the biggest percentage gainers on the main board were Nippon Concrete Industries (5269.T), which soared more than 30 percent, andJapan Bridge (5912.T), up 19 percent.

By contrast, the benchmark Nikkei .N225 fell 1.4 percent to 8,378.36, back below its 25-day moving average near 8,467 after closing above the technical level on Friday.

Market participants said the only support came from heightened expectations of the Bank of Japan's buying of exchange-traded funds (ETFs) in afternoon trade.

The broader Topix fell 1.3 percent to 725.24.

U.S. markets are closed on Monday for a national holiday and market players said it would be difficult to move without cues from Wall Street.

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Regional equity risk premium: link.reuters.com/mum95s

Global equities real earnings vs trend: link.reuters.com/caq95s

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

EXPORTERS FALL

Exporters with high exposure to Europe fell, as the euro zone news pushed the euro to its lowest in almost 11 years versus the yen and a 17-month low against the dollar.

TDK Corp (6762.T) eased 1.7 percent, Canon Inc (7751.T) dropped 2.2 percent, and Konica Minolta Holdings Inc (4902.T) fell 2.7 percent. Sharp Corp (6753.T) lost 2.9 percent to 637 yen.

A 25-day rolling correlation of the companies' stock prices and the euro's performance showed little relationship, but market participants said investors sold exporters heavily on the perception of a negative impact.

It's difficult to see the euro snapping back and gaining any time soon, which creates worries for major exporters, said Ryota Sakagami, chief strategist at SMBC Nikko Securities.

Panasonic (6752.T) shed 2.1 percent to 616 yen, hitting its lowest since at least 1984. Traders also cited Citigroup's downbeat report published last week as another reason behind the sell-off.

Financials also came under pressure on concerns that the deepening euro zone sovereign debt turmoil would lead to a banking crisis.

Sumitomo Mitsui Financial Group (8316.T) fell 2.2 percent to 2,194 yen, Mizuho Financial Group (8411.T) dropped 1.8 percent to 107 yen, and Mitsubishi UFJ Financial Group (8306.T) shed 2.7 percent to 325 yen.

Brokerages Nomura Holdings (8604.T) shed 2.8 percent to 246 yen and rival Daiwa Securities Group (8601.T) lost 2 percent to 240 yen.

Trading volume was thin, with 1.35 billion shares changing hands on the main board, down from 1.69 billion shares on Friday.