Nikkei tumbles to 3-week low as U.S.-China trade war worsens

* China unveils retaliatory tariffs on $75 bln worth of U.S.
goods
* Trump to raise existing tariffs on Chinese goods to 30% on
Oct 1
* Japan, U.S. trade talks progress, concessions on auto
unlikely
* Powell says will 'act as appropriate' to support growth

By Tomo Uetake
TOKYO, Aug 26 (Reuters) - Japanese shares shed more than 2%
on Monday, with China-related firms leading the losses after a
fresh escalation in the Sino-U.S. trade war knocked global
equities markets.
The Nikkei share average .N225 fell as much as 2.6% to
20,173.76, its lowest level since Aug. 6, before ending the
morning session at 20,258.92, 2.2% lower on the day.
"One wonders how long these trade tariffs on both sides can
keep going up and up before they start making the economy and
stock market go down and down," said Chris Rupkey, chief
financial economist at MUFG Union Bank. "Investors have had
enough and want out."
China on Friday imposed tariffs on about $75 billion in
imports from the United States including some agricultural
products, crude oil and small aircraft. Hours later, U.S. President Donald Trump heaped an
additional 5% duty on some $550 billion in targeted Chinese
goods in the latest tit-for-tat escalation between the world's
largest economies. This sent stocks, the dollar and oil prices sharply lower on
Friday while safe havens, with all three Wall Street major
indexes shedding between 2.4% and 3% on Friday. .N/C
The broader Topix .TOPX shed 1.8% to 1,475.21 by the
midday break, with all of Tokyo's 33 subindexes falling.
Machinery and chip-equipment makers were especially hit hard
as the new round tariffs triggered profit-taking in companies
which rely on China demand.
Yaskawa Electric 6506.T plunged 6.1% and Fanuc Corp
6954.T slid 3.7%, while Tokyo Electron 8035.T , Murata
Manufacturing 6981.T and TDK Corp 6762.T shed 2.5%, 2.6% and
3.1%, respectively.
Automakers and exporters were broadly lower after the yen
gained to 104.46 against the dollar JPY=EBS , a level not seen
since Jan. 3.
Subaru Corp 7270.T slid 2.1% and Panasonic Corp 6752.T
dropped 2.3%.
A strong yen reduces corporate profits when they are
repatriated. The yen last stood at 105.25 yen to the dollar.
President Trump and Japanese Prime Minister Shinzo Abe said
late Sunday that the United States and Japan agreed in principle
to core elements of a trade deal they hoped to sign in New York
next month. U.S. Trade Representative Robert Lighthizer said the deal
covered agriculture, industrial tariffs and digital trade, and
that auto tariffs would remain unchanged.
"Developments over the weekend have taken U.S.-China trade
war to a whole different level. No one can be naive enough to
think this will end anytime soon," said Norihiro Fujito, chief
investment strategist at Mitsubishi UFJ Morgan Stanley.