CORRECTED-Nikkei hits over 4-1/2-month low as global slowdown worries loom large

(Corrects Topix milestone to lowest since Jan. 4, not late
December, in first bullet & 13th paragraph)
* Nikkei falls to lowest since mid-Jan, Topix at lowest
since Jan.
4
* Exporters, mining stocks weak
* Cocokara Fine soars on merger talks with Sugi

By Ayai Tomisawa
TOKYO, June 3 (Reuters) - Japan's benchmark stock index
tumbled to a more than 4-1/2-month low on Monday morning, as
risk sentiment was hurt due to worries that a prolonged
U.S.-China trade war and Washington's tariff threat to Mexico
could derail the global economy.
The Nikkei share average .N225 fell as much as 1.4% to
20,305.74 in early trade, the lowest since Jan. 15, before it
trimmed the losses and was down 1.2% at 20,361.76 at the midday
break.
The strengthening of yen also hurt the mood, battering
exporters. The dollar was flat at 108.23 yen JPY= , recovering
from 108.17, its lowest since Jan. 15.
Shares of Fanuc Corp 6954.T tumbled 2.7%, Yaskawa Electric
6506.T declined 1.6%, Tokyo Electron 8035.T shed 2.1% and
Komatsu Ltd 6301.T fell 2%.
A senior Chinese official said on Sunday that United States
cannot use pressure to force a trade deal on China, refusing to
be drawn on whether the leaders of the two countries would meet
at the G20 summit to bash out an agreement. China threatened on Friday to unveil an unprecedented
hit-list of "unreliable" foreign firms, groups and individuals
that harm the interests of Chinese companies, as a slate of
retaliatory tariffs on imported U.S. goods. "Investors' main concern is that the trade war may hurt
global growth," said Toru Ibayashi, executive director of wealth
management at UBS Securities, Japan, adding that the Nikkei
could fall further.
On Monday, a private business survey showed that China's
factory activity expanded at a steady but modest pace in May,
but the overall economic picture was mixed as output growth
slipped and factory prices stalled. "The U.S. manufacturing growth is also slowing. Moreover, we
may not be able to avoid a negative impact to the Japanese auto
industry from U.S.-Mexico issues," Ibayashi said.
U.S. President Donald Trump, incensed by a surge of illegal
immigrants across the southern border, vowed on Thursday to
impose a tariff on all goods coming from Mexico, starting at 5%
and ratcheting higher until the flow of people ceases.
On Saturday, Mexico's president hinted his country could
tighten migration controls to defuse Trump's threat to impose
tariffs on Mexican goods, and said he expected "good results"
from talks planned in Washington next week. Mining stocks also lost ground, after oil prices on Monday
extended losses over 5% from Friday. Inpex Corp 1605.T
stumbled 2.5%, while Japan Petroleum Exploration Co 1662.T
plunged 3.7%.
The broader Topix .TOPX dropped 1% to 1,496.72, after
falling to as low as 1,490.28, the weakest level since Jan. 4.
Buying in defensive stocks reflected investors' risk-averse
stance. Utility and real estate shares outperformed, with Tokyo
Electric Power 9501.T rising 1.6% and Mitsubishi Estate
8802.T soaring 2.5%.
Meanwhile, drugstore operator Cocokara Fine 3098.T jumped
16.5% to a daily limit high of 4,905 yen after the company said
it is discussing a merger with Sugi Holdings.