Nikkei drops, latest U.S.-China tensions hurt investor mood

TOKYO, Oct 9 (Reuters) - Japanese shares fell on Wednesday
as escalating U.S.-China tensions dimmed hopes for a deal in
high-level trade talks this week and soured the mood of
investors.
The Nikkei share average .N225 fell 0.61% to 21,456.38
while the broader Topix .TOPX lost 0.30% to 1,581.70, though
both had pared earlier losses and advancing shares outpaced
declining stocks.
Washington on Tuesday imposed visa restrictions on Chinese
officials for the detention or abuse of Muslim minorities, a
move Beijing denounced as interference in its internal affairs.
The U.S. decision cast a pall over high-level trade talks
set for Thursday and Friday in the U.S. capital. Growth-sensitive technology shares led Tokyo's decline, with
robot maker Fanuc 6954.T down 1.6% and Keyence 6861.T off
1.2%.
Chip-related shares were hit the hardest, with Sumco
3436.T , a maker of silicon wafers, down 3.4% and Advantest
6857.T falling 2.4%.
"There is profit-taking in chip related stocks after big
gains yesterday as the sector is susceptible to the U.S.-China
relations," said Nobuhiko Kuramochi, chief strategist at Mizuho
Securities.
"The big fall in Phiadelphia semiconductor stock index also
hurt the sentiment," he added.
AGC 5201.T dropped 2.9% after the glass maker said it
expected a 36% drop in annual net profit due to an impairment in
its auto glass business.
Nissan Motor 7201.T fell 1.1%, a bit more than the overall
market, after automaker said its new CEO is an executive known
for close ties to top shareholder Renault RENA.PA .
Defensive stocks attracted buyers. Kao 4452.T , a
manufacturer of toiletries, rose 1.6%, while retailer Seven&I
Holdings 3382.T gained 0.7%.
Kansai Electric Power 9503.T rose 2.5% after media
reported its chairman has decided to resign amid a graft scandal
that has rocked public trust in Japan's second-largest utility.