June 25, 2018 / 2:31 AM / a year ago

Nikkei drops as large caps, defensive stocks weigh; Sharp tumbles

* Sharp stumbles after co says to issue new shares

* U.S. futures fall on reports Trump plans to bar China cos from investing in U.S. tech firms

* Yen strengthens against dollar

By Ayai Tomisawa

TOKYO, June 25 (Reuters) - Japan’s Nikkei share average dropped on Monday morning in choppy trade as sellers targeted large caps including Fast Retailing and SoftBank as well as defensive stocks, while miners rallied after oil prices jumped on Friday.

Sharp Corp stumbled 4.9 percent to 2,497 yen, the lowest since December 2016 after the company said it will issue 78.4 million shares via a public offering.

The Nikkei fell 0.5 percent to 22,396.33 in midmorning trade after opening a tad higher. It slipped 0.8 percent on Friday to post a 1.6 percent drop for the week.

Analysts said the market was somewhat relieved after U.S. shares rose on Friday and the Dow put to rest an eight-day losing streak, but with the U.S. futures falling in Asian trade, investors braced for pressure to build on Wall Street later in the day.

The S&P500 mini futures fell more than 0.5 percent in early Asian trade after the Wall Street Journal reported that U.S. President Donald Trump plans to bar many Chinese companies from investing in U.S. technology firms.

“The stronger yen is hurting sentiment, but what investors are selling primarily are the defensive names today, so the impact to exporter shares seems to be limited for now,” said Hikaru Sato, a senior technical analyst at Daiwa Securities.

All the same, investors remain cautious amid global trade frictions and any fallout on Japan’s export-reliant economy, he said.

The dollar dropped 0.5 percent to 109.46 in Asian trade.

Fast Retailing shed 0.9 percent and SoftBank declined 1.5 percent, contributing a combined 31 negative points to the Nikkei.

Defensive railroad and food stocks languished, with East Japan Railway dropping 2.2 percent, West Japan Railway shedding 1.1 percent and Kikkoman Corp falling 0.9 percent.

Mining stocks staged a rally, with Inpex Corp surging 3.5 percent and Japan Petroleum Exploration Co gaining 1.3 percent after oil prices on Friday jumped as the Organization of the Petroleum Exporting Countries agreed on a modest increase in oil production from next month.

In Asian trade, oil prices pulled back after factoring in the slight output rise.

The broader Topix dropped 0.5 percent to 1,736.66. (Editing by Shri Navaratnam)

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