Japan shares suffer worst fall in 4 months on earnings fears

* Nikkei, Topix make second biggest fall so far this year
* Concerns about upcoming earnings season lead to broad
selling
* Volatility index jumps after put buying
* Canon falls 4.0% on media report of likely profit warnings
* Animation-related firms hit after suspected arson at
studio

By Hideyuki Sano
TOKYO, July 18 (Reuters) - Japanese shares recorded their
biggest one-day fall in nearly four months on Thursday as dismal
export data and weak U.S. corporate earnings raised fresh
worries about fallout from the Sino-U.S. trade war.
The Nikkei share average .N225 fell 1.97% to 21,046.24
points, hitting a one-month low and marking its second biggest
slide so far this year only after a 3% plunge on March 25.
The broader Topix .TOPX fell 2.11% to a one-month closing
low of 1,534.27.
"The earnings of global manufacturers will be soft for now.
Investors are on the sidelines and waiting to buy on dips only
if the Nikkei falls below 21,000," said Takashi Hiroki, chief
strategist at Monex Securities.
As the U.S. earnings season kicked off, weak results from
railway transport company CSX Corp CSX.O stoked concerns that
the protracted trade standoff between the United States and
China could hurt the profits of U.S. companies.
The outlook is seen even bleaker in Japan as companies
struggle with the U.S.-China tariff war amid deteriorating
global conditions that have dragged on its exports.
Japan's June exports to China dropped more than 10% from a
year earlier, its sixth fall in the past seven months, trade
data showed on Thursday. Ahead of Japanese earnings seasons that will start later
this month, Canon 7751.T fell 4.0% after the Nikkei business
daily reported its operating profit was on track to sink 40%
this year. NOK Corp 7240.T fell 6.4% after the manufacturer of
sealant products slashed its earnings outlook, cutting its
annual operating profit estimates by 34% on weak sales of
car-related products in North America and China.
Nikkei's slide accelerated after a few major technical
support levels, including 25- and 50-day moving averages.
Some brokerages bought a large amount of Nikkei put options
with strike price of 20,000 -- essentially bets that the Nikkei
will fall below that level -- to cover their trade with clients,
further weakening the mood.
As a result, the Nikkei volatility index .JNIV , which hit
two-year low of 13.01 the previous day, jumped to 16.44, making
the biggest jump in nearly four months.
A broad range of shares came under pressure, including both
cyclicals as well as defensive shares, with decliners
outnumbering advancers by 96 to 2 on the main board.
Some shares with link to animation-making industry were hit
after more than 10 people are feared dead in a suspected case of
arson at an animation studio in Kyoto. Cinema company Toho 9602.T fell 4.5% while Toei Animation
4816.T dropped 3.2%. Entertainment firm Bandai Namco 7832.T
lost 3.2%.
Elsewhere, Akebono Brake Industry Co Ltd 7238.T rose 7.8%
after the troubled car parts maker said it expects to receive
investment from a corporate turnaround fund to help restructure
its money-losing business.