Tokyo stocks close lower on reduced US-China trade hopes

The dollar fetched 110.91 yen in Asian afternoon trade, down from 111.00 in New York but up from 110.51 yen in Tokyo on Wednesday. (AFP pic)

TOKYO: Tokyo stocks fell Thursday as the US chief trade negotiator poured cold water on market optimism over US-China trade negotiations, while investors were also watching the US-North Korea summit.

The benchmark Nikkei 225 index slipped 0.79%, or 171.35 points, to close at 21,385.16, while the broader Topix index was down 0.79%, or 12.76 points, at 1,607.66.

US Trade Representative Robert Lighthizer said on Wednesday there remained much to do before reaching a new trade agreement with China, even as both sides signal their talks are nearing the finish line.

After months of negotiating with Beijing, “now we are making real progress”, Lighthizer told Congress.

However, “much still needs to be done both before an agreement is reached and more importantly after it is reached if one is reached.”

Lighthizer’s remarks to a House committee underscored the remaining hurdles facing negotiators despite the apparent eagerness on both sides to bring their trade war to an end.

The comments sent US shares mostly lower, and “poured cold water on the optimistic atmosphere in markets”, Yoshihiro Ito, Okasan Online Securities chief strategist, said in a note.

However, a relatively cheaper yen against the dollar was supporting the downside of the Japanese market, he added.

The dollar fetched 110.91 yen in Asian afternoon trade, down from 111.00 in New York but up from 110.51 yen in Tokyo on Wednesday.

Trading was thin as investors were sidelined waiting for results of a summit between US President Donald Trump and North Korean leader Kim Jong-un in Hanoi.

“Players want to confirm if the summit would lead to easing regional tension,” Daiwa Securities senior technical analyst Hikaru Sato told AFP.

Japan’s factory output in January fell 3.7% from the previous month, due chiefly to declines in production in automobiles and electronic goods, official data released 10 minutes before the opening bell showed.

In Tokyo, China-linked shares were lower, with electronic parts maker Rohm dipping 3.56% to 7,030 yen, industrial robot maker Fanuc off 2.12% at 18,440 yen and construction machinery maker Komatsu down 2.63% at 2,731 yen.

Automakers were among losers, with Toyota slipping 1.22% to 6,697 yen and Honda off 0.72% at 3,153 yen.