TOKYO: Japan’s Nikkei share average ended lower on Monday amid worries over trade tensions between the U.S. and China, and a stronger yen, which hurt automakers.

The Nikkei fell 1.3% to 37,470.67 and the broader Topix slipped 0.87% to 2777.29.

“Investors were worried about rising uncertainties about trade issues,” said Shoichi Arisawa, general manager of investment research at IwaiCosmo Securities.

“Optimism over the tariff policy, which pushed the Nikkei over the psychologically important level of 38,000 last week, has vanished.”

U.S. President Donald Trump on Friday accused China of breaching a trade agreement with the U.S. and issued a new veiled threat to get tougher with Beijing.

Trump later said he would speak to China’s President Xi Jinping and hopefully work out their differences on trade and tariffs.

The yen strengthened on Monday, rising 0.6% to 143.15 against the U.S. dollar, following the declines of U.S. Treasury yields on Friday. This also weighed on Japanese stocks, said Arisawa.

A stronger yen typically weighs on exporter shares by reducing the value of overseas earnings when converted back into Japanese currency.

“One market-moving cue would be the G7 leaders’ summit to be held in Canada later this month, where we may see the fate of trade talks between Japan and the U.S.,” said Arisawa.

Automakers fell, with Toyota Motor and Honda Motor down 2.82% and 2.11%, respectively.

Chip-related shares declined, with Advantest and Tokyo Electron slipping 3.76% and 1.72%, respectively.

All but five of the Tokyo Stock Exchange’s 33 industry sub-indexes fell, with the auto sector and tyre makers losing 2% and 3.22%, respectively, to become the worst performers.

T&D Holdings ended 4% higher after a report said an activist investor built a 4-5% stake in the insurer group.

Reuters