Japan's Nikkei ends at 5-mth low on concerns over U.S. rate hike, Ukraine

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TOKYO, Jan 25 (Reuters) - Japan's Nikkei index fell to a five-month low on Tuesday, weighed down by investor caution over the situation in Ukraine, broadening inflationary risks and on concerns of a faster-than-expected U.S. rate hike by the Federal Reserve.

The Nikkei share average (.N225) ended down 1.66% at 27,131.34, the lowest close since Aug. 20, after falling as much as 2.5% to 26,890.94, its lowest level since Dec. 29.

The broader Topix (.TOPX) ended 1.72% lower at 1,862.62, after losing as much as 2.5%. The Mothers Index (.MTHR) of start-up shares fell 4.82% to its lowest level since April 2020.

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Technology stocks dragged the Nikkei lower, with start-up investor SoftBank Group (9984.T) losing 5.34%, chip-making equipment maker Tokyo Electron (8035.T) falling 2.69%. Motor maker NIDEC (6594.T) slipped 4.44%.

Wall Street bounced back from a steep sell-off to close higher overnight, with bargain hunters pushing the indexes into positive territory.

Investors are keenly watching every move of the U.S. Fed as the central bank will begin its two-day meeting later on Tuesday, with investors starting to speculate that there is a small possibility that they will announce a surprise rate hike.

In a sign that geopolitical tensions are heating up, NATO announced it was putting forces on standby to prepare for a potential Russian invasion of Ukraine. read more

"Investors became cautious after seeing the steep falls on Wall Street last night, and they became even more sensitive to declines in U.S. futures today," said Shoichi Arisawa, general manager of the investment research department at IwaiCosmo Securities.

"The market will remain like this until the FOMC (Federal Open Market Committee) is over but after tomorrow, with the earnings season kicking off, investors will start hunt for stocks with good earnings."

Nihon M&A Center Holdings (2127.T) tanked 12.2% after the broker for mergers and acquisitions for small firms delayed its earnings announcement.

Defense-related Ishikawa Seisaku (6208.T) gave up a 12% jump to slip 3.37%, while Howa Machinery also revered course to lose 0.9% lower.

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Reporting by Junko Fujita, additional reporting by Tokyo markets team; Editing by Sherry Jacob-Phillips and Shailesh Kuber

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