By Sam Byford

TOKYO, June 30 (Reuters) - Japanese stocks dropped on Thursday, losing more than 1.5% after data showed that monthly industrial production fell the most in two years and the yen weakened to a 24-year low overnight, stoking fears of an economic slowdown.

The Nikkei share average .N225 fell steadily throughout the day and lost 1.54% by the end of trading. The broader Topix index .TOPX was down 1.20% on the day.

The Japanese yen JPY= rebounded slightly to trade at 136.17 to the U.S. dollar after hitting a new 24-year low overnight, breaching the key 137 mark.

Earlier in the day, Japan's Ministry of Economy, Trade and Industry released data that showed industrial production fell 7.2% in May, the second straight monthly decline and the biggest monthly drop in two years.

"May's weaker-than-expected industrial production cast a shadow," said Kazuo Kamiya, a strategist at Nomura Securities. "The market is in a position where negative factors are likely to be reflected."

Automakers and other exporters have been hit by shortages of parts and complications from the COVID-19 lockdowns in China.

Toyota Motor Corp 7203. , the world's largest car manufacturer, was down 1.32% after the company missed its May production target, which had already been revised downward.

"Hopes for a recovery from the components shortage have receded," said a market participant at a domestic securities firm. "The outlook wasn't bad, but it looks like the market is still sceptical."

The S&P 500 .SPX was down slightly overnight and is on track for its worst first-half performance in more than 50 years amid fears that central banks' measures to combat soaring inflation could lead to a recession.

Of the Nikkei's 225 components, 153 made losses, three were flat, and 69 made gains.

Energy was the worst-performing Nikkei sector, down 2.77%. Oil company Inpex Corp 1605.T closed 3.61% lower as Brent crude futures LCOc1 dropped 0.09% to $116.15 a barrel, on track for a second consecutive session of losses.

Financial services company Japan Exchange Group 8697.T was the worst performer, losing 6.2%. Semiconductor manufacturer Screen Holdings Co Ltd 7735.T was next at 5.37%.

Construction companies Taisei Corp and Kajima Corp were the top movers, up 1.68% and 1.57%, respectively.

Fujifilm Holdings was the best early performer after announcing an investment of $1.6 billion to expand its cell culture manufacturing capacity, but the stock lost its gains to trade down 0.11% on the day.

Reporting by Sam Byford and Tokyo markets team; Editing by Sherry Jacob-Phillips