August 3, 2018 / 7:01 AM / a year ago

Most Japanese shares drop on trade war jitters, Suzuki jumps

* Topix falls 0.54 pct to 3-week closing low

* Suzuki Motor gains 8.6 pct on earnings, helps to lift Nikkei

* Toyota down slightly despite upbeat earnings

* Kubota plunges after cutting outlook

By Hideyuki Sano

TOKYO, Aug 3 (Reuters) - Japan’s Topix index of shares dropped on Friday as Sino-U.S. trade tensions and upcoming trade talks between Washington and Tokyo kept investors on edge, although the Nikkei managed to eke out slight gains partly due to a sharp rise in Suzuki Motor.

The Topix, the market-weighted index of all shares on the Tokyo Stock Exchange’s main board, fell 0.54 percent to 1,742.58, its lowest close in three weeks, with decliners outnumbering gainers by almost 4 to 1.

The Nikkei average ended 0.06 percent higher at 22,525.18 thanks to gains in a small number of shares that have disproportionately high weightings such as Fast Retailing , Fanuc and Suzuki.

Suzuki rose 8.6 percent after the automaker posted record profits for the April-June quarter, beating analyst estimates.

That alone boosted the Nikkei by more than 20 points, or 0.09 percentage point.

On the week, both the Topix and the Nikkei posted their first weekly losses in four weeks.

“Foreign investors have sold Japanese shares in August for the past eight years. And as Japan will start trade talks with the U.S. later this month, we could expect pressure while there are also worries about tariffs the U.S. threatens to impose on China,” said Masahiro Ayukai, senior strategist at Mitsubishi UFJ Morgan Stanley Securities.

“We should expect more selling from investors, perhaps later this month.”

Threats from the Trump administration to raise the planned tariffs on $200 billion of imports from China to 25 percent from the 10 percent proposed earlier have dampened the market mood.

Investors are also getting nervous as Japan is due to start bilateral talks with the United States next week.

Concerns over trade tensions offset the impact of generally positive Japanese corporate earnings on the back of current strength in the global economy.

Toyota Motor fell 0.85 percent even after it posted a 19 percent profit-jump for the first quarter, beating estimates and clocking its best quarterly performance in 2-1/2 years.

Elsewhere, Kubota, which manufactures tractors and heavy equipment, fell 8.3 percent after it cut its annual net profit guidance by 4 percent on rising raw material costs.

Large cap shares continued to outperform smaller peers, as they have been doing since last month.

The Topix core 30 fell 0.31 percent, while the Topix Small fell 1.02 percent. (Reporting by Hideyuki Sano Editing by Sam Holmes and Joseph Radford)

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