September 7, 2018 / 2:34 AM / 17 days ago

CORRECTED-Nikkei drops to 2-1/2-week low on trade worries; chip equipment makers dive

(Corrects headline and first paragraph to say Nikkei drops to 2-1/2 week low)

* Nikkei heads for biggest weekly drop in 6 months

* Advantest, Tokyo Electron tumble

By Ayai Tomisawa

TOKYO, Sept 7 (Reuters) - The Nikkei dropped to 2-1/2-week lows on Friday as investors sold chip equipment makers and fretted over reports that U.S. President Donald Trump could be contemplating taking on Japan over trade.

Global markets were already on edge amid fears that the United States and China could launch another round of tit-for-tat tariffs anytime as a public comment period on U.S. measures ends.

The benchmark share average dropped 0.9 percent to 22,278.04 points by mid-morning, after falling to as low as 22,210.67, its lowest level since Aug. 22.

For the week, the Nikkei looked set for a loss of 2.6 percent, heading for its biggest weekly fall since mid-March.

The market was spooked after CNBC reported that Trump had told a Wall Street columnist that he will take his global trade fight to Japan.

“Investors were worried that sooner or later, Japan’s auto industry would be Trump’s target and now they are bracing for more details,” said Takuya Takahashi, a strategist at Daiwa Securities.

“The mood has deteriorated as the market was already nervous with U.S.-China tariff issues.”

Exporters’ shares were under pressure, with Toyota Motor Corp dropping 1.3 percent, Subaru Corp declining 2.5 percent and Mazda Motor Corp shedding 1.5 percent. Kyocera Corp tanked 3.1 percent and Panasonic Corp fell 1.7 percent.

Chip equipment makers also weighed on the benchmark index, after KLA Tencor tumbled 9 percent after Chief Financial Officer Bren Higgins said September was still “a drought for DRAM” and that a pick-up in business later this year would be less than expected.

Advantest Corp dived 6.2 percent and Tokyo Electron tumbled 5.9 percent. High-purity silicon maker Sumco Corp declined 4.8 percent and Shin-Etsu Chemical shed 2.5 percent.

The broader Topix declined 0.8 percent to 1,679.94. (Editing by Kim Coghill)

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