* Investors could be positioning for a possible drop - analyst
* Market watches "black swan index" - analyst
* Toshiba soars as fears of imminent delisting recede
By Ayai Tomisawa
TOKYO, Aug 9 (Reuters) - Japan's Nikkei share average tumbled to 2-1/2-month lows on Wednesday morning on escalating geopolitical tensions with North Korean, which boosted the safe-haven yen and knocked many stocks.
The Nikkei .N225 dropped 1.3 percent to 19,738.71, the weakest closing level since May 31, but defence equipment makers attracted buyers, with Ishikawa Seisakusho 6208.T soaring 5.0 percent, Howa Machinery 6203.T rising 1.1 percent and Tokyo Keiki 7721.T advancing 1.4 percent.
North Korea said on Wednesday it is "carefully examining" plans for a missile strike on the U.S. Pacific territory of Guam, just hours after U.S. President Donald Trump told the North that any threat to the United States would be met with "fire and fury". over geopolitical tensions on the Korean peninsula hit when market was already sluggish on a seasonal slowdown in activity in the summer," said Mutsumi Kagawa, chief global strategist at Rakuten Securities.
The CBOE Volatility Index .VIX , better known as the VIX and the most widely-followed barometer of expected near-term stock market volatility, closed at 10.96, its highest in about a month.
Kagawa also said the market is also keeping an eye on the CBOE SKEW INDEX .SKEWX , or so-called "black swan" index, which measures the likelihood of extreme moves in the S&P 500 based on how traders are pricing the index's options.
"The index is showing a warning sign as it is rising after U.S. shares staged a rally recently," Kagawa said, adding that investors could be positioning for a possible sharp sell-off in the near future.
The option-based indicator, which was mostly between 120-140 in July, rose to 140.05 on Wednesday.
The dollar ws down 0.3 percent to 110.01 yen JPY= , following a retreat to 109.740, its weakest since mid-June, which hurt bellwether stocks such as automakers, tech shares and banks.
Thirty of Topix's 33 subsectors were in negative territory.
Toyota Motor Corp 7203.T dropped 1.6 percent, Honda Motor Co 7267.T shed 1.2 percent, TDK Corp 6762.T stumbled 2.0 percent and Advantest Corp 6857.T slipped 2.6 percent.
Mitsubishi UFJ Financial Group 8306.T and Sumitomo Mitsui Financial Group 8316.T slumped 1.1 percent and 1.3 percent, respectively.
Olympus Corp 7733.T stumbled 7.7 percent after the company's April-June operating profit dropped 4.9 percent on the year to 12.7 billion yen, hurt by weak demand for medical equipment.
Also in the spotlight was Toshiba Corp 6502.T , which was demoted to the Tokyo Stock Exchange's second section this month, Its shares rose 3.2 percent after sources told Reuters the Japanese conglomerate's auditor was likely to sign off on its annual results. broader Topix .TOPX fell 1.1 percent to 1,617.90 and the JPX-Nikkei Index 400 .JPXNK400 shed 1.0 percent to 14,375.72.