*

Banks hit by lower bond yields, speculation of rate-hike

delays

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Strengthening of safe-haven yen heaps pressure on

exporters

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Drugmakers spared as pharmaceuticals escape latest levies

(Updates with closing prices and details)

By Kevin Buckland

TOKYO, April 3 (Reuters) - Japan's Nikkei share average

slumped to an eight-month low on Thursday after U.S. President

Donald Trump revealed a broad set of reciprocal tariffs,

including a larger-than-anticipated 24% levy on Japanese goods.

The Nikkei dropped as much as 4.6% in early trading,

diving to 34,102.00, its lowest point since August 7. By the

close, the losses had moderated, with the index finishing down

2.8% at 34,735.93.

The broader Topix lost as much as 4.3% before

recovering slightly to end the day 3.1% lower.

"We thought tariffs would be 10%, maybe 20%, but instead

they were a whopping 24%," said Kazuo Kamitani, an equities

strategist at Nomura Securities.

"Call it the Trump tariff shock," he said. "The market is

firmly in risk-off mode."

Banks were the worst performers among the Tokyo

Stock Exchange's 33 industry groups, sliding 7.2%, as a sharp

decline in bond yields darkened the outlook for income from

lending and investing.

The potential impact of tariffs on both domestic and global

growth also raised speculation that the Bank of Japan may need

to delay further interest rate hikes.

Resona Holdings ( RSNHF ) was the worst-performing lender in

the Nikkei with an 8.7% slump.

An index of shippers declined 6%, and Nippon

Yusen, Japan's largest shipping line, dropped 5.6%. In

an interview with Reuters this week, the company's president

expressed concerns that U.S. trade barriers could ultimately

slow down cargo flows.

A rally in the safe-haven Japanese yen exacerbated

losses for the country's numerous exporters.

The Tokyo bourse's automaker sub-index dropped

4.5%, with shares of Toyota Motor ( TM ) sliding 5.2%.

In a rare respite among Trump's aggressive tariff measures,

the latest levies will not be added on top of a separate 25%

duty on car exports to the United States that is set to take

effect later in the day.

Drugmakers were among the few stocks to rise as a group

, following a White House white paper that included

pharmaceuticals, along with semiconductors, on a short list of

products exempted from reciprocal tariffs.

Japanese chip-sector heavyweights ended lower, but

recovered from lows marked earlier in the session. Shares of

Tokyo Electron ( TOELF ) dropped 3.7% while Advantest ( ADTTF )

declined 4.5%.

Following Trump's announcement, Japanese Prime Minister

Shigeru Ishiba said he will continue to demand that the U.S.

reconsider its tariff measures.

"Though some market participants are expecting quick

deals (with Washington), negotiations could take time,"

particularly since the White House has targeted non-tariff

barriers to trade like VAT, said Norihiro Yamaguchi, an

economist at Oxford Economics.

"The equity market is unlikely to bounce back given

heightened uncertainties."