May 9, 2018 / 6:40 AM / a year ago

Nikkei drops after Trump quits Iran nuclear deal; Toyota shines after earnings

TOKYO, May 9 (Reuters) - Japanese stocks fell on Wednesday as global tensions flared after President Donald Trump pulled the United States out of an international nuclear deal with Iran, but Toyota rose after releasing earnings and announcing a share buyback.

The Nikkei ended down 0.4 percent at 22,408.88 points.

Trump’s move raised the risk of conflict in the Middle East, upsetting European allies and casting uncertainty over global oil supplies, which lifted shares of mining firm Inpex Corp by 1 percent.

“The short-term impact on the stock market may be limited, but worries over a mid-to-long term impact could lead to a risk-off stance from investors,” said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

“If oil prices stay high, costs will rise and that will trigger price increase.”

Toyota Motor Corp, which released its full-year result during trading hours for the first time, soared 3.8 percent to a three-month high of 7,424 yen after it posted an operating profit of 2.4 trillion yen ($21.90 billion) in the year just ended, outpacing rivals Volkswagen AG and Daimler AG for the fifth straight year.

Toyota forecast a 4.2 percent slide in operating profit to 2.3 trillion yen for the current year, hit by a stronger yen but still above market expectations.

Toyota also said that it would buy back up to 55 million of its own shares, or 1.85 percent outstanding, worth up to 300 billion yen.

Takeda Pharmaceutical fell 2.4 percent after it said on Tuesday it had agreed to buy London-listed Shire for ($62 billion), the biggest yet in a wave of deals sweeping the drugs industry.

The pharmaceutical sector tumbled 2.8 percent and was the worst sectoral performer on the board, with traders citing passive investors’ selling. Investors will have to reduce weightings of other drugmakers to invest in Takeda, whose market capitalization has ballooned, traders said.

Otsuka Holdings tumbled 5.5 percent, Daiichi Sankyo declined 3.8 percent and Eisai Co shed 1.5 percent.

Elsewhere, Asahi Group Holdings soared 7.2 percent after its January-March net profit jumped 430 percent to 14.8 billion yen.

The broader Topix dropped 0.4 percent to 1,772.91. ($1 = 109.5900 yen) (Editing by Shri Navaratnam and Kim Coghill)

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