* Inbound-tourism stocks drop on weaker-than-expected July arrivals
* Index-heavyweights Fast Retailing and Fanuc gain
By Ayai Tomisawa
TOKYO, Aug 16 (Reuters) - Japan’s Nikkei ended lower on Thursday after paring early losses following news of fresh talks between China and the United States, which raised hopes of a potential thaw in their trade war and weakened the yen.
The Nikkei share average ended 0.1 percent lower at 22,192.04. The Nikkei was deeply in negative territory in morning trade, but erased early losses at the midday break after China’s commerce ministry’s announcement that Vice Minister Wang Shouwen will hold talks in Washington in late August.
However, the broader Topix slumped 0.6 percent to 1,687.15, after touching its lowest since late March.
The dollar was slightly up against the yen at 110.83, compared with 110.47 in early Asian trade, after China’s announcement.
“The news lifted investors’ risk stance,” said Chihiro Ohta, general manager at SMBC Nikko Securities, adding that the market’s recovery mainly stemmed from futures’.
However, declining issues outnumbered advancing ones 1,673 to 367 on the main board.
“The Topix indicates the actual state of the Japanese market as the Nikkei is somewhat supported by buying in large-cap stocks which are heavyweight,” said Yutaka Miura, a senior technical analyst at Mizuho Securities.
“Since the Topix is weak, we need to stay cautious against a possible slide in the market in the coming days.”
Weakness in emerging market currencies remained a concern as this could trigger buying of safe-haven currencies, strengthening the yen, Miura added.
Shares of Japanese department stores, cosmetics makers and drugstores, which benefit from inbound tourism, fell sharply on news of lean visitor arrivals in July.
Arrivals rose 5.6 percent from a year earlier to 2.832 million, said Japan National Tourism Organization. The growth rate slowed from double-digits, due to natural disasters this summer and heavy rain in western Japan.
Isetan Mitsukoshi closed 1.7 percent lower, Takashimaya by 2.4 percent and Shiseido Co by 5.4 percent. Kose Corp dived 8.1 percent and Matsumotokiyoshi declined 3.5 percent.
Large cap, index-heavy Fast Retailing rose 2.1 percent, while Fanuc Corp surged 1.0 percent, helping the Nikkei outperform the Topix by adding 46 positive points to the Nikkei benchmark index. (Editing by Sherry Jacob-Phillips)