October 11, 2018 / 6:54 AM / a month ago

Nikkei suffers biggest daily drop since March amid global rout

* Nikkei drops 3.9 pct, closes at lowest level since Sept 10

* Yaskawa Electric drags down other industrial equipment makers

* Nikkei has fallen 8 pct from last week’s 27-year peak

* Strong Q2 earnings will likely support downside - analysts

By Ayai Tomisawa

TOKYO, Oct 11 (Reuters) - Japan’s Nikkei tumbled to a one-month low on Thursday and suffered its biggest daily decline since March, hit by a sell-off in global shares, while tech firms and industrial equipment makers underperformed.

Contributing to Japan’s fall was a profit forecast cut by industrial equipment maker Yaskawa Electric Corp, which dragged down shares of other industrial equipment makers with large exposure to China.

On Wednesday, Wall Street posted its biggest daily declines in eight months, after European shares had their worst day since June as concerns around rising debt yields gripped equity markets world-wide.

The Nikkei share average ended 3.9 percent lower at 22,590.86, the weakest closing level since Sept. 10.

The benchmark index has fallen around 8 percent from a 27-year high of 24,448.07 hit last week.

Analysts said that the Japanese market, which was showing signs of overheating, was prone to profit-taking but after a correction is done, the market should be supported by solid fundamentals.

“Companies will start reporting their July-September earnings soon, and strong results should support the downside of the market,” said Masahiro Fukuda, investment director at Fidelity Investments in Japan.

“Rising yields are not good for stocks for sure, but we will likely see a recovery in companies’ EPS, which is expected to offset the negative impact from high yields.”

While all of the Topix’s 33 subsectors were in the red, China-related stocks underperformed others.

Yaskawa Electric, which exports factory automation equipment to China, slashed its annual net profit forecast by 12.6 percent to reflect weak demand in motion controllers hit by falling capital expenditure as the Sino-U.S. trade dispute drags on.

The stock sank 6.1 percent, while industrial robot maker Fanuc Corp, Nabtesco Corp and Mitsubishi Electric Corp, slipped 6.8 percent, 6.0 percent and 5.1 percent, respectively.

Chip equipment makers lost ground on signs of slowing demand in the semiconductor industry, with Tokyo Electron sliding 3.9 percent, Advantest Corp tanking 4.5 percent and silicon products maker Shin-Etsu Chemical declining 4.3 percent.

SoftBank Corp, which has stakes in global tech companies such as Alibaba, dropped 5.8 percent, reflecting weakness in global tech stocks.

Traders said investors are also worried about its Vision Fund’s exposure to U.S. tech firms and Asian tech firms listed in the U.S. market and whose shares have been battered recently.

Shares of cosmetic makers, considered inbound tourism stocks, were also sharply sold, with Shiseido Co and Kose Corp both dropping 6.7 percent on worries Chinese tourism demand may fall.

Bucking the weakness, discount retailer Don Quijote Holdings Co touched a record 6,800 yen and closed up 10 percent.

The jump stemmed from an offer by FamilyMart Uny Holdings Co to sell its stake in general-merchandising unit Uny to Don Quijote for $1.9 billion and get 20 percent of the chain.

The broader Topix dropped 3.5 percent to 1,701.86. (Editing by Shri Navaratnam and Richard Borsuk)

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