Tokyo shares slip from 3-month highs as U.S.-China tensions rattle investors

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SYDNEY, May 29 (Reuters) – Japanese stocks retreated from three-month highs on Friday, as escalating U.S.-China tensions over Hong Kong prompted investors to take profits from recent sharp gains ahead of the weekend.

The benchmark Nikkei average fell 0.3% to 21,854.00 by the midday break, dropping below a major chart point of the 200-day moving average it crossed the previous day.

Market participants now await U.S. President Donald Trump’s response to China’s passage of a national security law for Hong Kong.

Trump said on Thursday he would hold a news conference on China on Friday, as his administration moves to pressure Beijing over its treatment of Hong Kong.

Traders said Sino-U.S. worries were the main headwinds and that this much of correction was not surprising given this week’s big rallies. The Nikkei rose 7.5% in the last four days.

The broader Topix dropped 0.4% to 1,571.18 by the midday recess, also off its three month-high touched on Thursday, with two-thirds of the 33 sector sub-indexes on the Tokyo exchange trading lower.

Highly cyclical iron and steel, sea transport and transport equipment were the worst three performing sectors on the main bourse.

Nissan Motor Co Ltd slumped 7.7% as the company posted an annual operating loss of 40.5 billion yen ($377 million) for the business year ended in March, its worst performance since 2008/09.

Nikon Corp slumped 8.8% after the company reported a massive 91.8% fall in its operating profit for the financial year ended on March 31.

Bucking the overall trend, the index of Mothers start-up shares advanced 2.6% to a 16-month high.

For the week, both the Nikkei and the Topix were still up 7.2% and 6.3%, respectively, and set to log their second consecutive weekly gains. ($1 = 107.4200 yen) (Reporting by Tomo Uetake; Editing by Subhranshu Sahu)

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