Tokyo shares dip ahead of China parliament meet; Sino-U.S. friction weighs

SYDNEY, May 22 (Reuters) - Japanese stocks slipped on
Friday, as investors maintained a cautious stance amid the
mounting Sino-U.S. friction and awaited policy cues from China's
parliamentary meeting, though the benchmark was poised for a
weekly gain.
The benchmark Nikkei average .N225 edged down 0.4% to
20,462.11 by the midday break, after flitting between positive
and negative territories. The index has gained 2.1% so far this
week, set for its first weekly rise in two.
In Beijing, about 3,000 delegates gathered on Friday to take
part in the annual gathering of National People's Congress,
China's largely rubber-stamp parliament, to discuss political
and economic policy in the backdrop of escalating tensions with
the United States. Global equities pulled back after Beijing was set to impose
new national security legislation on Hong Kong. The move drew a
warning from U.S. President Donald Trump, who said the United
States would react "very strongly" against it. The retreat from riskier assets followed Beijing's decision
with Hong Kong's Hang Seng index .HSI dropping 3.8%.
"There is no doubt that corporate earnings in Japan are
going to be challenging. So, this week, investors have been
caught between economic reality and U.S.-China trade and
political tensions," said Soichiro Matsumoto, chief investment
officer Japan at Credit Suisse.
The broader Topix .TOPX slipped 0.5% to 1,483.78 by the
midday recess, with all but four of the 33 sector sub-indexes on
the Tokyo exchange trading lower.
Highly cyclical iron and steel .ISTEL.T , mining .IMING.T
and non-ferrous metals .INFRO.T were the three
worst-performing sector sub-indexes on the main bourse.
The Nikkei's heavyweight SoftBank Group Corp 9984.T
advanced 3.2% as the tech conglomerate said it plans to sell 5%
of its domestic telco SoftBank Corp as part of a programme to
raise $41 billion through asset sales. Corp 9434.T shed 3.8% on the announcement.
Bucking the overall sombre mood, the index of Mothers
.MTHR , a startup market in the Tokyo Stock Exchange, edged up
0.5% to hit a fresh one-year high. In the previous session, the
index touched its highest since May 2019.
Japanese bio-pharma startup Anges 4563.T , which is
planning to develop a COVID-19 vaccine, climbed as much as 3.8%.
Investors largely shrugged off headlines that the Bank of
Japan has decided to launch a new lending facility that aims to
channel more funds to small and midsize businesses suffering
from the pandemic.