September 1, 2015 / 5:56 AM / 2 years ago

Nikkei falls 3 pct; investors on edge over China, U.S. rates

TOKYO, Sept 1 (Reuters) - Japanese stocks extended losses on Tuesday after surveys showed China’s factory sector shrank for the sixth straight month in August while investors remained on edge ahead of key U.S. data due throughout the week.

Sentiment was also hurt by capital expenditures data that showed slowing investment in plants and equipment by Japanese companies.

The Nikkei share average fell 3.2 percent to 18,284.14 during mid-afternoon trading.

“The market remains almost shell-shocked after the volatility we’ve seen recently and having events on the horizon that could produce further volatility has people a bit on edge,” said Stefan Worrall, cash equities manager at Credit Suisse.

“China continues to be a source of some concern and Japan’s capex data was also a bit deflating, but more so for policymakers than anyone else. The immediate focus for investors is policy response in the U.S.”

Market players said investors are counting on Friday’s release of U.S. non-farm payrolls data to signal whether or not the U.S. Federal Reserve may raise interest rates in September.

Speculation over the timing of an expected rate hike has seesawed, but market participants said strong payrolls data on Friday would likely solidify expectations around a September hike.

Investors dumped Toshiba Corp after the company further delayed release of its earnings for the year ending March, saying it had found new accounting irregularities. The stock fell to 4.8 percent by mid-afternoon.

The broader Topix dropped 3.1 percent to 1,489.95 and the JPX-Nikkei Index 400 shed 3.4 percent to 13,352.88. (Additional reporting by Ayai Tomisawa; Editing by Jacqueline Wong)

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