July 1, 2020 / 3:38 AM / 13 days ago

Japan shares dip as BOJ tankan saps risk appetite

TOKYO, July 1 (Reuters) - Japanese shares inched lower on Wednesday as investor sentiment soured after the Bank of Japan’s quarterly corporate survey showed the domestic business mood worsened to an 11-year low because of the coronavirus crisis.

The benchmark Nikkei average fell 0.19% to 22,246.20 by the midday break.

The Nikkei futures fell 0.25% during the midday recess after Japan’s Chief Cabinet Secretary Yoshihide Suga said the coronavirus state of emergency could be re-imposed in a worst case scenario.

Tokyo has sought to keep new infection cases below 20 a day since Japan lifted a state of emergency in late May, but has had five straight days of more than 50 new cases, as of Tuesday.

The Bank of Japan’s tankan survey released on Wednesday showed the mood among big manufacturers declined to minus 34 last month from minus 8 in March, reaching its lowest level since June 2009.

The BOJ survey also indicated that big firms plan to raise capital expenditure by 3.2% in the current fiscal year through March 2021, higher than initially expected.

E-mini futures for the S&P 500 last quoted down 0.28%, creating an added headwind to Japanese shares.

All but five of 33 sector sub-indexes on the Tokyo exchange traded in the red. Airlines and paper and pulp stocks declined the most, falling 1.76% and 1.64%, respectively.

Automobile shares were weak despite the softer yen, as the BOJ survey indicated sentiment among large automobile manufacturers delined to minus 72 from minus 17 in March.

Suzuki Motor Corp slipped 3.39%, Honda Motor Co Ltd slumped 1.69% and Nissan Motor Co Ltd fell 1.13%.

The broader Topix dipped 0.45% to 1,551.80 by the recess. (Reporting by Eimi Yamamitsu, Editing by Sherry Jacob-Phillips)

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