October 3, 2019 / 2:07 AM / 15 days ago

Nikkei slides 2% on weak U.S. data, Trump tariffs on Europe imports

TOKYO, Oct 3 (Reuters) - Japanese shares tumbled on Thursday, with the Nikkei falling about 2%, after jobs data from the U.S. cemented concerns that the trade war with China is taking toll on the U.S. economy and as Washington opened a new trade war front with Europe.

The Nikkei share average fell 1.93% to 21,358.10, hitting its lowest levels in more than three weeks while the broader Topix lost 1.87% to 1,566.51, also a three-week low.

The ADP National Employment Report in the United States showed private payrolls growth in August was not as strong as previously estimated, another worrying signal after a report on Tuesday showing U.S. September factory activity contracted by the most in more than a decade.

The Trump administration said it will slap 25% tariffs on French wine, Italian cheese and single-malt Scotch whisky, in retaliation for European Union subsidies on large aircraft, threatening to trigger a tit-for-tat trans-Atlantic trade war.

“While direct impacts on Japanese shares should be limited, markets are looking at them in terms of whether the world is heading further to protectionism, which will be bad for the global economy,” said Masayuki Kubota, chief strategist at Rakuten Securities.

As investors fret about possible U.S. recession, Japanese cyclical shares led Thursday’s losses with securities brokerages falling 2.9% and transport equipment makers losing 2.8%.

Daiwa Securities Group Inc dropped 3.3% and Nomura Holdings Inc fell 2.1%.

Among automakers, Toyota Motor Corp slid 2.4% while Suzuki Motor Corp lost 3.3% and Nissan Motor 2.8%.

Insurers were among big losers too, with T&D Holdings falling 3.9% after U.S. financials underperformed on Wednesday.

About 95% of shares declined in early trade, with all of the Tokyo Stock Exchange’s 33 industry subindexes posting losses.

Markets players say the selling was inevitable given many shares had been overbought.

So-called up-down ratio, which measures the number of shares that have risen over the past 25 days against those that have fallen, has risen to 141%, way above 120% mark usually seen as a sign of short-term overheating. (Reporting by Hideyuki Sano; Editing by Richard Borsuk)

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