Nikkei drops to two-week low as China virus spreads; cyclicals lose ground

TOKYO, Jan 23 (Reuters) - Japanese shares skidded to two-week lows on Thursday, led by commodity-related and other cyclical stocks, as heightened anxiety about the spread of a new coronavirus in China sapped confidence.

Investors were also wary ahead of corporate earnings, pushing the Nikkei share average down 1.0% to 23,795.44, its lowest closing level since Jan. 10. The broader Topix fell 0.8% to 1,730.50.

A broad range of shares fell, with all but two of the Tokyo Stock Exchange’s 33 industry subindexes in negative territory.

Traders said a sharp slide in commodity prices, partly due to worries about China’s virus outbreak, weighed on commodity-related and other cyclical stocks.

Deaths from China’s new coronavirus rose to 17 on Wednesday, with nearly 600 cases confirmed. The outbreak has evoked memories of Severe Acute Respiratory Syndrome (SARS) in 2002-2003, another coronavirus which broke out in China and killed nearly 800 people in a global pandemic.

A potentially rapid spread of the virus, as millions of Chinese travel domestically and abroad during the week-long Lunar New Year holidays which start on Friday, kept global health authorities and investors on edge.

Among the Tokyo bourse’s subsectors, sea transport , oil and coal products and mining were the worst performing subindexes, declining by 2.6%, 2.2% and 2.0%, respectively.

The Japanese yen firmed to a 1-1/2-week high of 109.53 yen versus the dollar as investors sought safety, though it also served as a headwind for exporter stocks.

Bucking the overall weak trend, semiconductor automated test equipment (ATE) maker Advantest climbed 2.5% to its highest in 13 years, after its U.S. competitor Teradyne’s fourth quarter earnings beat estimates.

In Japan, Nidec Corp and Disco Corp are due to announce their financial results for the October-December quarter after the market close on Thursday.

Elsewhere, Rakuten Inc lost 3.8% after media reported Japan’s antitrust regulator will launch an investigation into the e-commerce giant over its free-shipping policy of the company’s online shopping mall.

Reporting by Tomo Uetake; Editing by Jacqueline Wong & Shri Navaratnam