TOKYO, Feb 19 (Reuters) -

Japanese shares slipped on Wednesday, dragged by a decline

in vehicle manufacturers after U.S. President Donald Trump's

auto tariff threat, while a rise in banks on bets for Bank of

Japan's (BOJ) interest rate hike capped losses.

The Nikkei share average fell 0.41% at 39,108.88 by

the morning break.

"The Nikkei opened lower as remarks about tariffs on cars

weighed on sentiment," said Shuutarou Yasuda, a market analyst

at Tokai Tokyo Intelligence Laboratory.

Trump said on Tuesday he intended to impose auto tariffs "in

the neighbourhood of 25%" and similar duties on semiconductors

and pharmaceutical imports, the latest in a series of measures

threatening to upend international trade.

The auto index slipped 1.5%.

Toyota ( TM ) dropped 1.93%, pushing the broader Topix

down 0.41% to 2,764,01.

Honda ( HMC ) and Nissan ( NSANF ) shed 2.29% and 1.8%,

respectively.

Bank shares rose, with Mitsubishi UFJ Financial Group ( MUFG )

hititng a record high before ending the morning session

up 0.02%, while Sumitomo Mitsui Financial Group ( SMFG ) rose

2.23% to become the biggest support for the Topix.

The banking index jumped 0.79%.

BOJ board member Hajime Takata said that the Japanese

central bank must continue to raise rates gradually to avoid

upside price risks from materialising.

"The BOJ is positive about raising rates at a time when

other countries are cutting rates. That is not positive for

Japanese stocks," Yasuda said.

The Nikkei dipped slightly below the 39,000 level soon after

Takata began his speech, but recovered promptly.

Chip-related Tokyo Electron ( TOELF ) and Advantest ( ADTTF )

rose 2.59% and 0.37%, respectively, to track the benchmark S&P

500, which squeaked past its previous record closing high.