Nikkei hits 3-month low as intensifying trade war hurts sentiment

* Nikkei loses 0.59%, Topix sheds 0.4%
* China-related stocks volatile as short-sellers cover
positions

By Ayai Tomisawa
TOKYO, May 14 (Reuters) - Japan's Nikkei stooped to a
three-month low on Tuesday, as investor sentiment took a further
hit after China defied Washington by announcing retaliatory
tariffs, dragging most sectors into negative territory.
China said it would impose higher tariffs on $60 billion in
U.S. goods despite President Donald Trump's warnings not to
retaliate against additional tariffs on Chinese imports
announced by the White House on Friday. The Nikkei share average .N225 ended the day down 0.59% at
21,067.23 after falling to as low as 20,751.45, the lowest since
mid-February.
"Investors are concerned how much damage the trade war will
cause on Japan's real economy and financial market," said
Shusuke Yamada, vice president and chief Japan FX strategist at
Bank of America Merrill Lynch.
Automakers came under pressure. Mazda Motor 7261.T slid 2%
and Subaru Corp 7270.T fell 2.3%.
Nissan Motor Co 7201.T fell 2.95% after the Nikkei
business daily reported that the automaker will likely
experience its fourth straight year of decreasing profits in the
financial year through March 2020. But traders added that with signs of the market being
oversold, some short-term investors were covering earlier
shorts.
Komatsu Ltd 6301.T , with a large exposure to China, ended
up 0.55% after slumping 4% earlier. Fanuc Corp 6954.T was up
0.1% after dropping 2.9% and Yaskawa Electric 6506.T rose
nearly 1% after sliding 4.5%.
Large telecommunication companies, considered defensive
shares, gained amid the drop in the broader market. Nippon
Telegraph and Telephone Corp 9432.T rose 1.9% and KDDI Corp
9433.T climbed 2.4%.
The broader Topix .TOPX shed 0.4% to 1,534.98, after
falling to a more than four-month low of 1,508.85.
Small cap markets also lost ground, with the Mothers index
.MTHR sliding 1.96% and the Jasdaq market .JSD shedding
0.59%.