TOKYO, Aug 17 (Reuters) - Japan's Nikkei share average hit a 2-1/2-month low on Thursday amid concerns over more U.S. Federal Reserve interest rate hikes and dim outlook of China's economy, while the yen weakening further against the dollar prompted a sell-off.

The Nikkei fell 1.22% to 31,377.84 by 0157 GMT, its lowest level since June 2. The broader Topix was down 1.25% to 2,232.48.

"Investors were reacting only to negative market cues - rising global yields and ongoing worries about China's economy," said Takehiko Masuzawa, trading head at Phillp Securities Japan.

Benchmark 10-year U.S. Treasury yields hit a fresh 10-month high during Asian trading hours, after minutes from the Fed's July meeting showed that officials were divided over the need for more rate hikes.

"The yen's weakness to the dollar drove speculation for the government intervention. If that happens, the yen will strengthen, which is negative to Japanese equities."

The Japanese yen further weakened against the dollar on Thursday, touching its lowest since November, below the level that last year triggered intervention.

Uniqlo brand owner Fast Retailing lost 2.21% to become the biggest drag on the Nikkei. Technology investor SoftBank Group fell 1.22% and healthcare equipment maker Terumo was down 2.90%.

Tourism-related shares weakened even after data signalled a firm recovery in the nation's tourism. Cosmetics maker Shiseido slipped 3.85% and department store operator Isetan Mitsukoshi Holdings fell 3.66%,

The number of visitors to Japan in July rose to its highest since the pandemic, official data showed on Wednesday, as a weaker yen helped in boosting tourism and contribute to a growth surge in the world's third-largest economy.

All the 33 industry sub-indexes on the Tokyo Stock Exchange fell, with steel makers, down 2.95%, dropping the most among the indexes. Kobe Steel lost 3.72%.

(Reporting by Junko Fujita; Editing by Rashmi Aich)