October 16, 2018 / 2:56 AM / a month ago

Nikkei heavyweight shares rebound but Apple suppliers, retail stocks fall

* Automakers, SoftBank rise after sharp declines on Monday

* Retail faces double whammy of tax hike and weak China demand

* Market awaits inbound tourism data due out after market close

By Ayai Tomisawa

TOKYO, Oct 16 (Reuters) - Japan’s Nikkei rebounded on Tuesday morning supported by short covering in index heavyweights, but Apple suppliers fell on worries about slowing demand from China.

The Nikkei share average rose 0.8 percent to 22,445.98 in midmorning trade, after tumbling 1.8 percent on Monday to close at its lowest level since Aug. 21.

Traders said that Tuesday’s gains were mainly due to a technical rebound, as the Nikkei was trading 5 percent below its 25-moving average, a sign of an oversold market.

Index-heavyweights such as SoftBank Corp and Fast Retailing rebounded, rising 3.2 percent and 2.3 percent, respectively, after they were heavily sold on Monday.

Automakers also regained ground, with Toyota Motor rising 0.7 percent and Honda Motor 1.4 percent.

The overall Japanese market was dented on Monday after the U.S. Treasury secretary called for a clause to deter currency manipulation in U.S. foreign trade pacts with countries including Japan.

While the index rose on Tuesday, traders said concern on trade lingered and Japan’s planned sales-tax hike pressured shares linked to personal consumption.

“There may be short-covering to some extent, but it may take a while for the Nikkei to fully recover its drops,” said Naoki Fujiwara, a fund manager at Shinkin Asset Management, adding that the market has not factored in the impact from the tax hike yet.

On Monday, Prime Minister Shinzo Abe pledged to go ahead with increasing the national sales tax to 10 percent from 8 percent next October.

The retail sector, which has faced the double whammy of worries about slowing consumption in Japan and weak China demand, dropped 0.6 percent to a more than a one-month low. It has fallen the past three days.

Department stores underperformed, with Takashimaya Co falling 1.6 percent and Isetan Mitsukoshi 1.0 percent.

Cosmetics makers Shiseido Co shed 2.3 percent and Kose Corp tumbled 4 percent, while babybottle maker Pigeon Corp stumbled 7.6 percent. Some of these companies have large exposure to China.

The market will watch the September figure for tourists visiting Japan, due after Tuesday’s close.

Tuesday’s losers included Apple suppliers, with Taiyo Yuden tumbling 4 percent and Murata Manufacturing Co sliding 1.2 percent, after Apple Inc shares fell 2.1 percent on a Goldman Sachs report saying there were multiple signs of rapidly slowing consumer demand in China, which could affect demand for iPhones.

The broader Topix rose 0.5 percent to 1,683.28. (Editing by Richard Borsuk)

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