TOKYO, Aug 16 (Reuters) - Japan's Nikkei share average ended at a more than two-month low on Wednesday as China's economic outlook weighed on risk appetite, while banking shares slid after a report on a possible downgrade of U.S. major banks.

The Nikkei index fell 1.46% to 31,776.82, its lowest close since June 8 and its biggest daily decline since Aug. 3.

The broader Topix slipped 1.29% to 2,260.84.

"Concerns have grown over the global economy as the outlook for China, one of the two largest economies in the world, is dim. This has impacted Japanese shares at a time when we are not seeing many market moving cues in Japan," said Shigetoshi Kamada, general manager at the research department at Tachibana Securities.

A broad array of Chinese data on Tuesday highlighted intensifying pressure on the economy on multiple fronts, prompting Beijing to cut key policy rates to shore up activity.

"The report on the Fitch downgrade on U.S. banks has also hurt risk appetite," Kamada added.

The banking index lost 2.29% after U.S. peers, including JPMorgan Chase and Bank of America, fell after a report said ratings agency Fitch could downgrade multiple U.S. banks.

Mitsubishi UFJ Financial Group fell 2.94%, Sumitomo Mitsui Financial Group lost 1.56% and Mizuho Financial Group slipped 2.12%.

Uniqlo brand owner Fast Retailing lost 1.87% to become the biggest drag on the Nikkei. Technology investor SoftBank Group slipped 3.13% and chip-making equipment maker Tokyo Electron lost 1.14%.

The energy-related index declined, with refiners falling 2.79%, to become the worst performer among the 33 industry sub-indexes on the Tokyo Stock Exchange. Energy explorers slipped 2.25%.

Chip-testing equipment maker Advantest rose 1.1% to provide the biggest support to the Nikkei.

(Reporting by Junko Fujita; Editing by Rashmi Aich and Sonia Cheema)