Japan’s Nikkei slumps on trade war worries, stronger yen

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TOKYO (Reuters) -Japan’s Nikkei share average slumped on Friday in a brutal end to a volatile week as investors worried about the economic fallout from the rapidly escalating U.S.-China trade war as well as a strong yen that has been lifted by safe-haven flows.

The Nikkei ended 2.96% lower at 33,585.58 after declining as much as 5% earlier in the session.

The broader Topix closed down 2.85% at 2,466.91.

“Risk in equities is too high right now with such huge volatilities every day. The best thing to do, I would say, is to stay away from the market,” said Yusuke Sakai, a senior trader at T&D Asset Management.

The Nikkei started the week sliding to an 18-month low on Monday but then surged 6% on Tuesday before slipping again on Wednesday. On Thursday it soared 9%, its biggest one-day gain since August. The Nikkei lost 0.6% for the week.

The sudden moves underscore investor restlessness as they try to gauge the risks from a raft of tit-for-tat tariff headlines.

“Equities rise as long as companies grow, but I am afraid that the companies may not be able to disclose their outlook, and even if they do, it could be conservative. That may push the Nikkei to a new low,” said Sakai.

Japanese companies will start announcing their outlook for this fiscal year from the end of this month.

The dollar slumped 1% to its lowest level since September 30 against the yen, as investors ditched U.S. assets amid growth concerns.

A stronger Japanese currency tends to hurt shares of exporters, as it decreases the value of overseas profits in yen terms when firms repatriate them to Japan.

Uniqlo-brand owner Fast Retailing lost 2.04% and chip-testing equipment maker Advantest slipped 4.59%.

Of the 225 Nikkei components, 22 stocks rose and 203 fell.

(Reporting by Junko Fujita; Editing by Alan Barona, Mrigank Dhaniwala and Eileen Soreng)