* Nikkei down 0.55%, Topix hits 2-month closing low
* Selling spreads to shares with strong earnings prospects
* Airline, tourism-related shares steady for now
* Steel makers, shippers come under renewed pressure
By Hideyuki Sano
TOKYO, Jan 28 (Reuters) - Japanese shares slipped on Tuesday, with the Nikkei hitting a three-week closing low, as the new coronavirus spread in China and beyond, prompting authorities to take more drastic measures to contain its outbreak.
The Nikkei share average .N225 shed 0.55% to 23,215.71, the lowest close since Jan. 8. The Topix .TOPX , which includes all listed shares on the Tokyo Stock Exchange's main board, slipped 0.6% to a two-month closing low of 1,692.28.
Selling widened after being initially concentrated in sectors that are likely to be directly hit by the virus, such as tourism and related industries.
All but two of the 33 Topix industry subindexes .TSEK closed in the red.
"Share prices had been elevated, so a correction was necessary and the coronavirus provided that trigger," said Tetsuro Ii, president of Commons Asset Management.
"But as was the case with SARS and avian flu, it will take some time before this will be settled. As long as the number of patients is increasing, it will be hard for investors to buy shares aggressively."
The death toll from the coronavirus has passed 100 in China, and the rich, eastern province of Zhejiang has said companies there were not allowed to resume operations before Feb. 9. .ISTEL.T and shippers .ISHIP.T , seen as China-dependent, were among the worst performers, falling 2.4% and 1.3% respectively.
On the other hand, tourism-related shares, which have been badly hit since the virus started to rattle markets, steadied with the Topix air transport subindex .IAIRL.T closing almost unchanged.
Tokyo Disney Resort operator Oriental Land 4661.T eked out a gain of 0.1% after heavy selling the previous day.
Mask maker Kawamoto Corp 3604.T extended its rally, rising 23.7% in volatile trade. The company's market value has more than quadrupled so far this month.
But others saw their fortune reversed. Protective attire maker Azearth 3161.T fell 16.3% after having risen more than 100% in the six sessions until Monday.
Nitto Denko 6988.T , a manufacturer of industrial tapes and films, fell 1.6% as lower-than-expected quarterly earnings overshadowed a share buyback announcement.
Bengo4.com 6027.T slumped 18.4%, the biggest since its listing in December 2014, after the online legal support services provider posted its first ever quarterly loss.
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