* Investors risk averse but Greece’s contagion risk limited to Japanese market – analyst * Index-heavy stocks lower By Ayai Tomisawa TOKYO, Feb 17 (Reuters) – Japan’s Nikkei share average fell on Tuesday, retreating from a near eight-year high after talks between Greece and euro zone finance ministers on a new debt deal collapsed.

The Nikkei shed 0.3 percent to 17,946.55 points by mid-morning after rising to as high as 18,074.26 on the previous day, the highest since July 2007.

Talks between Greece and euro zone finance ministers over the country’s debt broke down when Athens rejected a proposal to request a six-month extension of its international bailout as “unacceptable”.

Dutch Finance Minister Jeroen Dijsselbloem, who chaired the meeting, said Athens had until Friday to request an extension, otherwise the bailout would expire at the end of the month.

Although the sudden collapse of the talks made investors risk averse, any impact to the Japanese stock market is seen as limited, according to market participants.

“I’m quite optimistic regardless of the outcome,” said Toru Ibayashi, executive director of wealth management at UBS in Tokyo.

“Even if Greece withdraws from the eurozone, its exit should not have a major contagion risk to the eurozone because European banks have little exposure to Greece compared to a few years ago.” Index heavyweigh stocks languished, with SoftBank Corp and Fast Retailing Co both falling 0.6 percent.

Exporters were mixed, with Toyota Motor Corp dropping 0.4 percent and Nissan Motor Co gaining 1.5 percent, and Canon Inc dropping 0.2 percent.

Underperforming the market was Hiroshima Gas Co, which tumbled 9.4 percent to a six-week low after saying it will sell up to 1.9 billion yen in new shares.

The broader Topix shed 0.1 percent to 1,457.66 and the JPX-Nikkei Index 400 also dropped 0.1 percent to 13,221.11.

(Editing by Kim Coghill)