October 4, 2019 / 6:43 AM / 14 days ago

Japan shares edge up as investors await U.S. jobs data; banks under pressure

TOKYO, Oct 4 (Reuters) - Japanese shares edged up on Friday after a sharp fall the previous day and ahead of key U.S. job data, but financials came under pressure as a soft U.S. service sector survey fanned growth worries and pulled Treasury yields lower.

The benchmark Nikkei average rebounded 0.3% to 21,410.20 points, after shedding 2% the previous day.

But it posted the biggest weekly loss in two months, down 2.1%.

The broader Topix added 0.3% to 1,572.90 but ended down 2% on the week.

On Thursday, the survey from the U.S. Institute for Supply Management (ISM) showed its non-manufacturing activity index falling to the lowest level in more than three years in September, and far below expectations.

The downbeat U.S. economic news adds to a set of weak data earlier in the week, and has deepened fears that the U.S.-China trade war is starting to hurt growth in the world’s biggest economy, resulted in Treasury yields dropping across maturities.

In Tokyo, financial stocks came under pressure, with banking and insurance sectors among the worst performers, down 0.9% and 0.5%, respectively.

Lower U.S. interest rates squeeze banks’ lending margins and interest income as Japanese banks and insurance companies have stepped up investments in the United States in recent years.

Another interest rate-sensitive area, the TSE REIT index climbed 1.1% to hit its highest in more than 12 years as falling bond yields have spurred demand.

Elsewhere, Apple-related electronic parts makers jumped after the Nikkei business daily reported Apple has told suppliers to increase their production of its latest iPhone 11 range by up to 10%, citing sources.

Murata Manufacturing climbed 1.9%, Alps Alpine gained 1.3% and Minebea Mitsumi soared 2.7%.

“Some domestic players seem to be ready to buy on dips but most of them are on the sidelines ahead of a key U.S. jobs report that could help determine whether the Federal Reserve cuts interest rates further,” said Yasuo Sakuma, chief investment officer at Libra Investments.

The data later on Friday is forecast to show the U.S. economy added 145,000 new jobs in September, more than 130,000 in the previous month. (Editing by Shri Navaratnam & Kim Coghill)

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