TOKYO, Nov 14 (Reuters) - Japanese shares hit 1-1/2-week lows on Thursday after profit-taking set in as doubts over an interim U.S.-China trade deal grew, while Line Corp and Z Holdings jumped on news the Yahoo Japan operator was in merger talks with messaging app firm Line.
The Nikkei share average retreated 0.8% to 23,141.55, its lowest since Nov. 5, and the broader Topix dropped 0.9% to 1,684.40, also a 1-1/2-week low.
Dashing upbeat expectations about a phase one deal was a Wall Street Journal report that said Sino-U.S. negotiations had “hit a snag” over farm purchases, with Beijing not wanting a deal that looks one-sided in favour of the United States.
Worries about violent anti-government protests in Hong Kong also soured investor sentiment.
“The Nikkei had been making considerable gains over the past weeks. Level wise, it’s no wonder investors moved to lock in some profits today,” said Yasuo Sakuma, chief investment officer at equity investment firm Libra Investments.
In the cautious climate, the safe-haven yen firmed as high as 108.66 overnight and was last quoted at 108.72 against the dollar, weighing on Japanese exporters as a strong domestic currency hurts corporate profits when they are repatriated.
Export-oriented Nissan Motor shed 3.5%, Honda Motor fell 2.2%, and Toyota Motor dropped 1.2%.
Z Holdings, which last month changed its name from Yahoo Japan, soared 16.9% after the internet firm said merger discussions were underway with Line Corp.
Shares in Line surged 15.4%, or its daily limit of 705 yen, while SoftBank Corp, which owns almost half of Z Holdings, climbed 1.9%.
The merger talks between Z Holdings and Line also put pressure on their competitors, with Rakuten Inc diving 5.8%.
Z Holdings was the most traded stock on the main board, while SoftBank Corp was the third-most traded issue.
The information and telecom sector rose 0.3% to become the best performer among Tokyo’s 33 subsector indexes.
Elsewhere, Recruit Holdings advanced 2.0% after the HR services provider reported its April-September net profit rose by 23.2% to 114.2 billion yen. (Editing by Jacqueline Wong)