June 28, 2017 / 6:44 AM / a month ago

Japan shares drop as techs underperform; small caps hit hard

3 Min Read

* Tech shares fall on weak Nasdaq performance

* Banks gain on rise in global bond yields

* Investors cautious after US Senate delays health bill vote

By Hideyuki Sano and Ayai Tomisawa

TOKYO, June 28 (Reuters) - Japanese stocks wobbled on Wednesday as tech shares followed their U.S. counterparts down and as souring sentiment battered small caps, while large cap bank shares benefited from a rise in global bond yields.

The Nikkei share average shed 0.5 percent to 20,130.41 while Topix declined 0.3 percent, with its drop mitigated by a 2.0 percent climb for the banking index.

The Topix Large, which covers the top 100 companies, was flat while the Topix Small, which has outperformed large cap shares this quarter, fell 1.0 percent on profit-taking ahead of the end of quarter.

Traders said overall sentiment was subdued as investors remain cautious after the vote on a healthcare bill was delayed in the U.S. Senate, raising fresh questions about President Donald Trump's domestic agenda.

"The news raised worries on overall sentiment and makes it hard for the market to take a firm direction," said Takuya Takahashi, a strategist at Daiwa Securities.

Tech shares languished after a sell-off in big tech names on the Nasdaq, which tumbled 1.6 percent. Google parent Alphabet fell 2.5 percent after EU antitrust regulators hit the tech giant with a record $2.7-billion fine.

In the Tokyo bourse, Canon Inc tumbled 3.2 percent while Tokyo Electron Ltd shed 4.3 percent and Murata Manufacturing Co dropped 2.5 percent.

Decliners outnumbered advancers by 1,383 to 503.

In a boost to bank stocks, the U.S. Benchmark 10-year notes yield rose to 2.22 percent overnight, up from 2.14 percent late on Monday after Fed Chair Janet Yellen said that it is appropriate to gradually raise rates.

"Yellen's comment is supporting Japanese financial stocks today, and for the long-term, Japanese stocks are on the rising trend supported by U.S.-led global economic recovery," said Mutsumi Kagawa, chief global strategist at Rakuten Securities.

Mitsubishi UFJ Financial Group gained 2.6 percent, Mizuho Financial Group soared 3.0 percent and SMFG advanced 2.2 percent. (Editing by Richard Borsuk)

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