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TOKYO, March 27 (Reuters) - Japan's Nikkei share average

declined more than 1% on Thursday, with automakers leading the

losses, as concerns over the potential impact of U.S. President

Donald Trump's auto tariff announcement weighed on sentiment.

By 0028 GMT, the Nikkei was down 1.1% at 37,624.08,

with the auto sub-index sliding 3%.

The broader Topix slipped 0.53% to 2,797.88.

Trump on Wednesday unveiled a 25% tariff on imported cars

and light trucks starting next week, escalating the global trade

war he reignited upon regaining the White House this year. Auto

industry experts expect the move will drive up prices and

disrupt production.

"The market reaction was limited because the tariff

announcement was within expectations," said Hiroyuki Ueno, chief

strategist at Sumitomo Mitsui Trust Asset Management.

"Investors probably expect that Trump will not do anything

that could seriously hurt the economy."

Shares of Toyota Motor ( TM ) lost 3.4% to become the

biggest drag for the Topix. Honda Motor ( HMC ) fell 2.8% and

Nissan Motor ( NSANF ) slipped 2.6%. Mazda Motor ( MZDAF ) lost

6.4% to become the worst performer in the Nikkei.

The decline in shares was also limited by expectations of

strong demand for Nikkei and Topix futures, said Seiichi Suzuki,

chief equity market analyst at Tokai Tokyo Research Institute.

Thursday is the last day to secure dividend payouts for

companies whose fiscal year ends in March.

Dividends will not be distributed until companies hold

their annual shareholders' meetings in June, but passive

investors are eager to invest the cash in advance by purchasing

futures to avoid tracking error - the unwanted performance

difference between an ETF and the index it tracks.

"If there had not been the demand for the futures, the

market could have fallen further all day," Suzuki said.

Chip-testing equipment maker Advantest ( ADTTF ) lost

6.59% to become the biggest drag for the Nikkei.

Online medical services operator M3 Inc ( MTHRF ) rose 2.61%

to provide the biggest support for the Nikkei.