May 25, 2018 / 2:11 AM / 3 months ago

Japan stocks slightly higher as defence stocks rally

TOKYO, May 25 (Reuters) - Japanese stocks were slightly higher on Friday, supported by defence-related companies after U.S. President Donald Trump canceled a summit with North Korea, although the return of geopolitical tensions kept wider investor sentiment subdued.

The Nikkei share average gained 0.2 percent to 22,482.31 in light midmorning trade after dipping into negative territory earlier. For the week, the index has fallen 2.2 percent so far and is poised to post the first weekly decline in nine weeks.

The broader Topix dropped 0.1 percent.

Defence equipment maker Ishikawa Seisakusho surged 6.3 percent, Howa Machinery jumped 6.4 percent, while health protection device maker Shigematsu Works soared 2.8 percent.

“Investors see exporter shares are difficult to invest in now due to a strong yen, so they are shifting their money to defence-related stocks for now,” said Yoshinori Shigemi, global market strategist at JPMorgan Asset Management.

“Investors’ risk stance came back earlier this week as trade war worries seemed to ease, but the relief was short-lived and investors seem risk averse again.”

Trump, in a letter to North Korea released by the White House, called off the June 12 summit, citing “tremendous anger and open hostility” in a recent statement by Pyongyang. The cancellation came even after North Korea followed through on a pledge to blow up tunnels at its nuclear test site.

Automakers continued to slide on worries about new U.S. tariffs.

Toyota Motor Corp dropped 1.0 percent and Subaru Corp declined 0.7 percent.

Defensive shares such as railway and food stocks, which are less affected to global risks, found support. East Japan Railway rose 1.0 percent, while Ajinomoto Co advanced 0.7 percent. (Editing by Sam Holmes)

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