Nikkei hits one-and-a-half-week low as Trump dents optimism on China-US trade talks

MSCI's broadest index of Asia-Pacific shares outside Japan stood little changed after dropping 0.6 percent the previous day. Japan's Nikkei rose 0.2 percent and Australian shares gained 0.1 percent. South Korea's KOSPI was little changed. (A man looks at a stock quotation board flashing the Nikkei 225 key index of the Tokyo Stock Exchange in front of a securities company in Tokyo on August 9, 2017. - AFP)

TOKYO: Japan's Nikkei share average fell to a 1-1/2-week low on Wednesday morning after U.S. President Donald Trump stoked uncertainty over the outcome of U.S.-China trade talks, while a stronger yen hurt exporters.

The Nikkei tumbled 1.2 percent to 22,688.18 in mid-morning trade, after sliding to 22,649.85 earlier, the weakest intraday level since May 11.

Trump on Tuesday said he was not pleased with recent trade talks between the United States and China, checking hopes that the world's two biggest economies were on course to hammer out a deal.

U.S. Treasury Secretary Steven Mnuchin has earlier said that trade war is "on hold", sending the Nikkei over the psychologically important 23,000 level on Monday.

Trump's latest remarks followed Beijing's announcement that it would cut import tariffs for automobiles and car parts.

"I don't think we need to worry too much about trade war hitting the market harder than now because China is seen compromising as it tries to defuse trade tensions with the U.S.," said Isao Kubo, equity strategist at Nissay Asset Management.

"That said, although investors do not expect that tension will deteriorate dramatically from the current state, there is still lingering uncertainty and that's keeping activity in check."

Exporters were sold as the yen bounced against the dollar, with TDK Corp <6762.T> declining 2.1 percent, Honda Motor Co <7267.T> shedding 1.3 percent and Daikin Industries <6367.T> falling 1.8 percent.

The dollar slipped 0.4 percent against the yen to 110.49 yen , after touching a four-month peak on Monday.

Shippers were also under pressure, with Mitsui OSK Lines <9104.T> and Kawasaki Kisen <9107.T> each dropping 2.8 percent.

Nishimatsuya <7545.T> stumbled 5.9 percent after the children's wear chain said its same-store sales in May dropped 8.3 percent on the year, hit by bad weather after Japan's Golden Week holidays.

The broader Topix <.TOPX> skidded 0.8 percent to 1,794.99. - Reuters