Tokyo: Stocks close lower on trade worries

[TOKYO] Tokyo stocks closed lower on Wednesday amid a flare-up in trade tensions between the United States and Europe, with investors eying a press conference by the European Central Bank president.

The benchmark Nikkei 225 index fell 0.53 per cent or 115.02 points to end at 21,687.57 while the broader Topix index was down 0.69 per cent or 11.10 points at 1,607.66.

"On top of the US-China trade war, tensions between the United States and Europe are escalating, spawning worries that the global economy may worsen further," Online Okasan Securities said in a note.

President Donald Trump on Tuesday lashed out at the European Union, vowing to impose tariffs on billions in imports, over subsidies to the aviation giant Airbus.

The International Monetary Fund cut its US growth forecast significantly for 2019 though it said the United States is still likely to outpace other advanced nations as the world economy slows.

The financial uncertainty underpinned the Japanese currency, with the dollar trading at 111.17 yen against 111.15 yen in New York Tuesday afternoon.

A higher yen is negative for Japanese exporters as it makes their products less competitive abroad and erodes their profits when repatriated.

Traders were also eyeing a press conference by European Central Bank President Mario Draghi to be held later in the day.

Nintendo fell 0.96 per cent to 32,920 yen and Toyota lost 0.52 per cent to 6,795 yen.

Japan Post tumbled 2.87 per cent to 1,249 yen after news of a new share sale by the government.

The finance ministry said late Tuesday it was preparing for a third sale of shares in the giant postal group.

The Nikkei business daily reported Wednesday that the government was planning the sale as early as autumn this year to raise around 1.3 trillion yen.

The move would cut the ministry's stake to the legally mandated minimum of just over one-third from the current 57 per cent, ending a privatisation process that has lasted more than a decade, the paper said.

Sony dropped 2.45 per cent to 5,121 yen a day after it surged more than 9 per cent following a report that hedge fund Third Point is raising funds to build up its stake in the Japanese electronics company.

AFP