Nikkei slides as virus anxiety offsets boost from softer yen

* Concerns on domestic virus epidemic weigh on Nikkei
* Railways, airlines and amusement park operators fall
* Internet firms gain, exporters benefit from softer yen

By Hideyuki Sano
TOKYO, Feb 21 (Reuters) - Japanese shares ended lower on
Friday as mounting coronavirus cases in China and other Asian
countries eclipsed the boost from a weaker yen, with many
investors closing their positions ahead of a long weekend.
Investors also dumped shares that appeared vulnerable to
further spread of the pathogen, such as transport services, and
instead picked up stocks of internet services firms.
The Nikkei share average .N225 dropped 0.39% to 23,386.74,
while the broader Topix .TOPX ticked down 0.03% to 1,674.00.
On the week, the Nikkei was down 1.27% and the Topix fell 1.70%.
That compared with a fall of 0.2% in U.S. S&P500 .SPX and
a 0.1% drop in FTSEurofirst .FTEU3 , as of Thursday.
"Japan stock ETFs have seen outflows of funds. At the
moment, investors favour U.S. and European stocks among the
developed markets," said Takeo Kamai, head of execution at CLSA.
The outbreak has already disrupted economic growth in China
and a further spread to other countries could derail a "highly
fragile" projected recovery in the global economy in 2020, the
International Monetary Fund warned on Wednesday. The new cases are mushrooming beyond China, most notably in
Japan and South Korea this week. Fund managers worry virus concerns will slow down various
economic activities, with many companies cancelling official
trips, seminars and parties as people kept away from crowds.
Retailers .IRETL.T ended 3.9% lower, while airlines
.IAIRL.T dropped 3.8% and railway operators .IRAIL.T shed
3.4%.
Many companies faced the double-whammy of a drop in Chinese
tourists.
"You ask around and everyone is cancelling business trips,
conferences and all sorts of things now ... At this point, I
just cannot buy any stocks," said Hisashi Iwama, senior
portfolio manager at Asset Management One.
Sanrio 8136.T fell 3.3% to a 21-month low after the
character goods company known for Hello-Kitty said it will shut
its amusement parks.
Tokyo Disney Resort operator Oriental Land Corp 4661.T
lost 2.5% for a weekly fall of 7.3%.
Steelmakers, leveraged to Chinese demand, were the worst
performer for the week, hit by a surprise decision from industry
leader Nippon Steel 5401.T late last week that it will slash
its production capacity by nearly 10%. Kobe Steel 5406.T lost 1.5% to a 17-year trough on Friday,
following Nippon Steel, which hit similar lows earlier this
week.
On the other hand, internet firms gained on expectations the
epidemic will stoke people to spend more time indoors and on the
internet.
Z Holdings 4689.T rose 4.5%, while Rakuten 4755.T also
gained 4.1%.
A weaker yen helped to lift exporters such as automakers,
with Toyota Motor 7203.T advancing 1.1%. The transport
equipment index .ITEQP.T added 0.5%.
The yen was headed for its worst week in two-and-a-half
years, as worries about the coronavirus' spread in South Korea,
Japan and Beijing drove funds from Asia to the towering U.S.
dollar. The market will be closed on Monday as Japan gears up to
celebrate the birthday of their new emperor.