Nikkei falls on caution over U.S.-China trade talks, earnings misses

* Markets await Fed policy decision, eye trade developments
* Investors digest mixed earnings: Nintendo falls, Sony
gains
* More earnings results coming up; Murata on Wed, Toyota on
Fri

By Tomo Uetake
TOKYO, July 31 (Reuters) - Japanese shares slid on
Wednesday, hurt by U.S. President Donald Trump's warning to
China not to drag out trade talks while some disappointing
earnings hit automotive parts suppliers and banks.
The Nikkei share average .N225 fell 0.86% to 21,521.53 as
investors cautiously awaited the U.S. Federal Reserve's policy
decision later in the day.
For the month of July, the benchmark eked out a 1.2% gain.
As a new round of U.S.-China trade negotiations started in
Shanghai, Trump warned China against waiting out his current
presidential term before finalising a trade deal. With Japan's earnings season in full swing, reactions to
individual earnings results dominated trading.
Sony Corp 6758.T soared 5.3% after the company surprised
the market on Tuesday by reporting a record first-quarter
operating profit despite the slowing gaming business, as strong
demand for multiple-lens camera systems for smartphones boosted
sales of image sensors. Denso Corp 6902.T shed 3.4% after the auto-parts maker
reported during the session that the company's operating profit
for the April-June quarter fell 23.9%, although analysts
forecasted a 20.2% rise. Another car parts supplier Aishin Seiki Co 7259.T dipped
2.6% after the company cut its profit forecast for the year
through March. Nintendo Co 7974.T fell 1.2% after the game maker reported
its operating profit fell 10% in the three months to June, below
market expectations, despite stronger sales of its Switch
console. Konica Minolta Inc 4902.T tumbled 11.4% after the
manufacturer of copy machines and other products posted an
unexpected net loss in the three months to June. Sumitomo Mitsui Trust Holdings 8309.T dropped 3.7% and
Sumitomo Mitsui Financial Group 8316.T retreated 1.0% as both
financial groups reported falls in first-quarter profits.
Bank shares .IBNKS.T fell 1.2% as the sector struggles
with low interest rates and weak fund demand, with top regional
banking group Concordia Financial Group 7186.T slipping 1.3%
and Shizuoka Bank 8355.T dipping 1.2%.
Analysts say Bank of Japan governor Haruhiko Kuroda's
comments on Tuesday that he is ready to deploy further stimulus
if necessary weighed on regional banks. Decliners outnumbered advancers but there were some bright
spots in earnings.
Anritsu Corp 6754.T climbed 4.1% after the leading 5G
testing systems provider reported better-than-expected 65.3%
growth in operating profits. Zozo Inc 3092.T jumped 11.0% after the online fashion
retailer posted stronger-than-expected quarterly profits.
More companies including Panasonic Corp 6752.T , Murata
Manufacturing Co 6981.T , Takeda Pharmaceutical Co 4502.T and
Japan Tobacco Inc 2914.T are due to announce earnings after
the market close on Wednesday.
The broader Topix .TOPX lost 0.66% to 1,565.14. Turnover
on the Tokyo Stock Exchange's main board rose to 2.67 trillion
yen, its highest in 5-1/2 weeks, due in part to rebalancing of
investor portfolios as the Nikkei's components are reshuffled.
Bandai Namco Holdings 7832.T will join the Nikkei average,
replacing Chiyoda Corp 6366.T on Thursday.