Tokyo stocks sink to 2-month low on trade war worries, stronger yen

* Prolonged US-China trade war seen as drag on global growth
* Yen fetches 105.80 yen vs dollar, saps exporters
* Dismal Q1 earnings send Kobe Steel, System sharply lower
* More earnings coming up; Subaru on Mon, SoftBank Group on
Wed

TOKYO, Aug 5 (Reuters) - Japanese shares dropped on Monday,
as investors grew nervous about a prolonged U.S.-China trade
war, with a stronger yen also dragging down exporters like
Panasonic and Daikin.
The Nikkei share average .N225 shed 2.4% by the midday
break, extending Friday's 2.1% slide, to 20,590.87, its lowest
level since June 4.
The grim mood followed declines on Wall Street on Friday
with the blue chip Dow and the S&P 500 hitting their lowest
levels since late June. .N
U.S. President Donald Trump abruptly decided on Thursday to
slap a 10% tariff $300 billion on Chinese imports, stunning
markets and ending a month-long trade truce. China vowed to
fight back on Friday. The rapidly strengthened yen during Asian trading also
soured sentiment and dragged down exporters, with Nissan
7201.T dropping 4.8%, Panasonic 6752.T down 3.5% and Daikin
Industries 6367.T slipping 3.9%.
On the currency market, the yen gained as much as 0.8% to
105.80 yen to the dollar, after the Chinese yuan tumbled past 7
per dollar to a record low in offshore trading CNH=D3 . FOX
All else being equal, a stronger yen hurts on Japanese
exporters' profits.
With Japan's earnings season already in full swing,
reactions to earnings continued to dominate trading on Monday.
Kobe Steel 5406.T nosedived 12.8% to its seven-year low,
after the country's third-largest steelmaker cut its recurring
profit forecast for the financial year ending March by 67% as
the U.S.-China trade war battered steel demand for automobiles
and aluminium and copper demand for chips. Sysmex 6869.T tumbled 12.7% as the medical devices maker
reported weaker-than-expected profits for the April-June
quarter. Yahoo Japan 4689.T slid 12.2% after the internet company's
operating profit fell 24%, below analyst estimates, disappointed
investors. The broader Topix .TOPX lost 2.4% to 1,496.61, its loweset
level in two months, by the midday break.