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Nikkei tumbles to 3-week low as U.S.-China trade war worsens

Published 26/08/2019, 04:05
© Reuters.  Nikkei tumbles to 3-week low as U.S.-China trade war worsens
USD/JPY
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JP225
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MS
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CL
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TOPX
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7270
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6506
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8035
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6752
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6762
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6954
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6981
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* China unveils retaliatory tariffs on $75 bln worth of U.S.

goods

* Trump to raise existing tariffs on Chinese goods to 30% on

Oct 1

* Japan, U.S. trade talks progress, concessions on auto

unlikely

* Powell says will 'act as appropriate' to support growth

By Tomo Uetake

TOKYO, Aug 26 (Reuters) - Japanese shares shed more than 2%

on Monday, with China-related firms leading the losses after a

fresh escalation in the Sino-U.S. trade war knocked global

equities markets.

The Nikkei share average .N225 fell as much as 2.6% to

20,173.76, its lowest level since Aug. 6, before ending the

morning session at 20,258.92, 2.2% lower on the day.

"One wonders how long these trade tariffs on both sides can

keep going up and up before they start making the economy and

stock market go down and down," said Chris Rupkey, chief

financial economist at MUFG Union Bank. "Investors have had

enough and want out."

China on Friday imposed tariffs on about $75 billion in

imports from the United States including some agricultural

products, crude oil and small aircraft. Hours later, U.S. President Donald Trump heaped an

additional 5% duty on some $550 billion in targeted Chinese

goods in the latest tit-for-tat escalation between the world's

largest economies. This sent stocks, the dollar and oil prices sharply lower on

Friday while safe havens, with all three Wall Street major

indexes shedding between 2.4% and 3% on Friday. .N/C

The broader Topix .TOPX shed 1.8% to 1,475.21 by the

midday break, with all of Tokyo's 33 subindexes falling.

Machinery and chip-equipment makers were especially hit hard

as the new round tariffs triggered profit-taking in companies

which rely on China demand.

Yaskawa Electric 6506.T plunged 6.1% and Fanuc Corp

6954.T slid 3.7%, while Tokyo Electron 8035.T , Murata

Manufacturing 6981.T and TDK Corp 6762.T shed 2.5%, 2.6% and

3.1%, respectively.

Automakers and exporters were broadly lower after the yen

gained to 104.46 against the dollar JPY=EBS , a level not seen

since Jan. 3.

Subaru Corp 7270.T slid 2.1% and Panasonic Corp 6752.T

dropped 2.3%.

A strong yen reduces corporate profits when they are

repatriated. The yen last stood at 105.25 yen to the dollar.

President Trump and Japanese Prime Minister Shinzo Abe said

late Sunday that the United States and Japan agreed in principle

to core elements of a trade deal they hoped to sign in New York

next month. U.S. Trade Representative Robert Lighthizer said the deal

covered agriculture, industrial tariffs and digital trade, and

that auto tariffs would remain unchanged.

"Developments over the weekend have taken U.S.-China trade

war to a whole different level. No one can be naive enough to

think this will end anytime soon," said Norihiro Fujito, chief

investment strategist at Mitsubishi UFJ Morgan Stanley (NYSE:MS).

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