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Nikkei slumps 228 points on Wall Street retreat, yen rise

JIJI

Stocks turned lower Thursday following an overnight drop in U.S. equities.

The 225-issue Nikkei average lost 227.77 points, or 0.99 percent, to close at 22,738.61 on the Tokyo Stock Exchange. On Wednesday, the key market gauge rose 88.03 points.

The Topix index of all first-section issues closed down 16.48 points, or 0.92 percent, to end at 1,783.89, after gaining 7.55 points the previous day.

Both indexes snapped three-session winning streaks.

Stocks met with selling from the outset of Thursday’s session, reflecting Wall Street’s retreat on Wednesday after the U.S. Federal Reserve hinted at a faster pace of interest rate hikes this year, market sources said.

The Tokyo market was also weighed down by the yen’s rise against the dollar amid growing concerns about fierce trade friction between the United States and China, the sources said.

The concerns were fueled by a news report Wednesday that said the administration of U.S. President Donald Trump is set to disclose as early as Friday a list of Chinese items that would be subject to new tariffs.

The key market gauges sank deeper in negative territory toward the close in line with the yen’s rise.

A U.S.-China trade war “has become a real possibility.” an official of an asset management firm said of the news report, suggesting a risk-averse mood prevailed over the Tokyo market.

Hiroaki Hiwada, strategist at Toyo Securities Co., pointed out that investor sentiment was battered by falls in other Asian markets as well as the trade worries.

But expectations for more purchases of exchange-traded funds by the Bank of Japan supported the market’s downside, Hiwada noted.

Falling issues far outnumbered rising ones 1,399 to 603 in the TSE’s first section, while 87 issues were unchanged.

Volume increased to 1.497 billion shares from 1.198 billion shares on Wednesday.

The stronger yen pushed down export-oriented names including automakers Toyota and Honda, semiconductor-related Tokyo Electron, motor maker Nidec and measurement equipment producer Keyence.

Aiful and Acom were downbeat after SMBC Nikko Securities Inc. revised their investment ratings downward Wednesday along with its stock price target for the nonbank lenders, brokers said.

Other major losers included clothing retailer Fast Retailing and mobile phone carrier SoftBank Group.

On the other hand, online mall giant Rakuten and beverage maker Kirin Holdings attracted purchases.

In index futures trading on the Osaka Exchange, the key September contract on the Nikkei average sagged 210 points to end at 22,700.