September 5, 2018 / 6:51 AM / 2 months ago

Nikkei down as typhoon damage fears hit cosmetics shares

* Damage to Kansai airport hit airlines, tourism-linked shares

* Fast Retailing rise on strong monthly sales, supports Nikkei

* Line plunges after convertible bond offers

* Trade worries another drag on market

By Hideyuki Sano

TOKYO, Sept 5 (Reuters) - Japanese shares fell on Wednesday as worries that a tariff war between China and the United States could escalate weighed on sentiment, while concerns that tourists will shop less due to a typhoon flooding a major airport hit shares in cosmetic makers.

Japan’s Nikkei share average dropped 0.51 percent to 22,581, dropped for a fourth consecutive session following its eight-day winning streak while the broader Topix fell 0.77 percent to 1,705.

The Nikkei would have been hit harder if not for a 3.1 percent gain for index heavyweight Fast Retailing, following strong monthly sales data.

Typhoon Jebi, the most powerful storm to hit Japan in 25 years, rammed through western Japan, killing at least nine people and briefly submerging a large part of Kansai Airport, which is built on a man-made island near Osaka.

Fears that it could take a few weeks before Kansai, Japan’s second-busiest international airport, could come back to full operation have hit aviation-related stocks.

The air transport index fell 1.2 percent. ANA Holdings and Japan Airlines were down 1.8 percent and 0.5 percent respectively.

Cosmetic makers, which have benefited from spending by Chinese and other foreign tourists, were hit even harder on worries the airport’s troubles could hamper tourism.

“Kansai airport is a major hub for inbound tourism, which is already hit by flooding in western Japan in July. If the airport cannot be used for some time, that is going to be a big blow to the shares that have benefited from inbound tourists,” said Masahiro Ayukai, senior investment strategist at Mitsubish UFJ Morgan Stanley Securities.

Shiseido fell 4.2 percent while Kose dropped 6.7 percent. Pola Orbis Holdings and Fancl Corp were down 4.9 percent and 9.7 percent respectively.

Shiseido and Fancl were among the best performing shares so far this year as they have attracted investors looking for shares that seemed least vulnerable to trade frictions.

Shares of Nankai Electric Railway Co, which operates trains connecting Kansai airport and Osaka, fell 4.4 percent.

Elsewhere, Line Corp fell 6.6 percent after the popular chat app operator said on Tuesday would raise around 148.1 billion yen ($1.33 billion) through convertible bonds.

Investors were wary of further escalation in trade disputes between Washington and Beijing, with U.S. President Donald Trump poised to impose 25 percent tariffs on $200 billion of imports from China some time after a review period that ends on Thursday.

There were also worries that Canada and the U.S. may not reach a trade deal as officials from two countries meet later in the day. (Reporting by Hideyuki Sano Editing by Eric Meijer)

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