TOKYO, Feb 20 (Reuters) - Japanese shares fell more than
1% on Thursday, as automakers declined due to a stronger yen,
while investors assessed the potential impact of U.S. President
Donald Trump's latest tariff threat.
The Nikkei fell 1.36% to 38,630.81 by 0203 GMT,
while the broader Topix was down 1.27% to 2,732.18.
"The yen's strength against the dollar and uncertainties
about the U.S. tariff policy pushed Japanese equities lower,"
said Naoki Fujiwara, senior fund manager at Shinkin Asset
Management.
The yen rose to a more than two-month high of
150.52 per dollar, helped by a flight to safety over worries
about the impact of Trump's tariffs and bets of more Bank of
Japan (BOJ) rate hikes this year.
A stronger Japanese currency tends to hurt exporters, as it
decreases the value of overseas profits in yen terms when firms
repatriate them to Japan.
Automakers lost ground, with Toyota Motor ( TM ) falling
2.3% to drag the Topix the most. Honda Motor ( HMC ) and Nissan
Motor ( NSANF ) slipped 2.45% and 4.22%, respectively.
Uncertainties about Trump's tariff plans also weighed on
automakers. Trump said on Wednesday he would announce tariffs
related to lumber, cars, semiconductors and pharmaceuticals
"over the next month or sooner."
Japanese banks also fell, snapping a rally driven by
expectations for a BOJ policy shift. Mitsubishi UFJ Financial
Group ( MUFG ) slipped 2.4% and Mizuho Financial Group ( MFG )
lost 2.4%.
Meanwhile, worries about higher interest rates also weighed
on sentiment. On Wednesday, BOJ board member Hajime Takata
called more rate hikes to avoid the inflation risk.
"What he said was quite true but the market reacted
sensitively to his comments because there were no other major
market-moving cues after the corporate earnings season ended,"
said Shinkin Asset Management's Fujiwara.
Among individual stocks, Shiseido ( SSDOF ) extended gains
fuelled by news that investment group Independent Franchise
Partners is a shareholder of the cosmetics maker.
(Reporting by Junko Fujita; Editing by Subhranshu Sahu)