February 3, 2020 / 6:48 AM / 25 days ago

Japan stocks track China markets lower as coronavirus spreads

TOKYO, Feb 3 (Reuters) - Japanese shares closed lower on Monday, tracking a sharp sell-off in Chinese equities, on rising worries over the economic impact from the coronavirus outbreak in China.

The Nikkei index ended 1.01% lower at 22,971.94, with consumer discretionary and information technology sectors leading declines.

Chinese markets, which were closed since the end of trade on Jan. 23 for Lunar New Year holidays, reopened on Monday with a steep fall of more than 9%.

The number of deaths from the virus jumped to 361 as of Sunday, the country’s health authority said on Monday.

Economists have already warned the outbreak will weigh on consumer spending, tourism, and factory activity in the world’s second-largest economy, which could weigh on Japan too, as China is one of the country’s top export markets.

“It is difficult to judge by only one day of trading, but sentiment will weaken if Chinese shares continue to fall, which is bad for Japanese stocks,” said Shusuke Yamada, head of FX and Japan equity strategy at Merrill Lynch Japan Securities Co in Tokyo.

“It’s uncertain how this will affect earnings-per-share ratios for Japanese stocks. So it is difficult to say where the Nikkei will find support.”

Meanwhile, Japan’s manufacturing activity shrank for a ninth month in January as output and new orders contracted again, pointing to further strains on the economy, a business survey showed.

There were 41 advancers on the Nikkei index against 177 decliners.

The largest percentage loser on the index was materials manufacturer Unitika Ltd, down 10.93%. Shares in the company, which makes materials used in surgical masks, fell as investors booked profits.

Department store operator Isetan Mitsukoshi Holdings Ltd was the second-biggest decliner, ending down 6.85%. The company lowered its profit forecasts on Friday after market hours, partly reflecting an expected decline in Chinese tourism to Japan.

The third-biggest decliner was auto parts and metals supplier Toyota Tsusho Corp losing 6%.

The largest percentage gainers were processed food and healthcare company Ajinomoto Co Inc up 6.09%, followed by drugs maker Eisai Co Ltd gaining 4.21%, and parcel delivery firm Yamato Holdings Co Ltd up by 4.17%.

The broader Topix index fell 0.7% to 1,672.66.

The volume of shares traded on the Tokyo Stock Exchange’s main board was 1.19 billion, compared with the average of 1.09 billion in the past 30 days. (Reporting by Stanley White; editing by Uttaresh.V)

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