May 18, 2020 / 6:56 AM / 10 days ago

Tokyo stocks gain as virus cases slow in Japan, but U.S.-China tensions weigh

SYDNEY, May 18 (Reuters) - Japanese shares rose on Monday as signs of a slowdown in coronavirus infections raised optimism that the government would soon ease restrictions in additional prefectures, although escalating U.S.-China trade tensions kept investors wary.

The benchmark Nikkei average gained 0.5% to 20,133.73, erasing early losses.

The daily number of new coronavirus cases reported in Tokyo dropped to five on Sunday, the lowest since the capital was placed under a state of emergency on April 7.

Japan lifted a state of emergency in large parts of the country on Thursday but said it would remain in place in Tokyo until the novel coronavirus was contained.

Increasing tensions between the United States and China, the world’s two largest economies, sent shares of chipmaking-related companies and electric component makers reeling.

The Trump administration on Friday moved to block global chip supplies to blacklisted telecoms equipment giant Huawei Technologies, fuelling fears of Chinese retaliation and hammering makers of chipmaking equipment on Wall Street.

Tokyo-listed chipmaking-related stocks also took hit after the Philadelphia semiconductor index lost 2.2% on Friday.

Screen Holdings Co Ltd tumbled 13.7%, while Tokyo Electron Ltd and Advantest Corp slid 3.7% and 4.3%, respectively.

Nikkei heavyweight SoftBank Group Corp rose 1% after the tech conglomerate’s board approved a second 500 billion yen tranche of share purchases, part of a 2.5 trillion yen ($23.3 billion) buyback programme announced in March.

The broader Topix added 0.4% to end at 1,459.29, with two-thirds of the 33 sector sub-indexes on the Tokyo exchange finishing higher.

Mining, fish and forest and information and communication were the three top-performing sub-indexes on the main bourse.

Sumitomo Mitsui Financial Group (SMBC) advanced 3.5% as the megabank’s annual net profit overtook that of rivals Mitsubishi UFJ Financial Group (MUFG) and Mizuho Financial Group for the first time.

Oil and gas companies Inpex Corp and Japan Petroleum Exploration Co Ltd jumped 4.0% and 8.2% respectively, as U.S. crude prices climbed 7% on Friday to their highest since March on strengthening fuel demand.

Japan Post Bank plummeted 14.3% as the company forecast a 26.8% fall in net profit for the business year ending March 2021 and pulled its annual dividend forecast, which came as a negative surprise, according to analysts.

Elsewhere, Renown Inc nosedived 38.5%, its daily limit, after the century-old textile company filed for bankruptcy on Friday with 13.9 billion yen in debt, partly due to the coronavirus outbreak.

Data showed Japan’s economy slipped into recession for the first time in 4-1/2 years, putting the nation on course for its deepest postwar slump, but had limited impact on the market.

$1 = 107.1600 yen Reporting by Tomo Uetake; Editing by Subhranshu Sahu

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