July 5, 2018 / 7:01 AM / 15 days ago

Nikkei falls to 3-month low; banks, inbound tourism stocks weaken

* Tourism firms tumble on worries of fewer Chinese tourists

* Fast Retailing makes sizable contribution to the Nikkei's drop

* Shares of 'MUJI' brand operator Ryohin Keikaku tumble

By Ayai Tomisawa

TOKYO, July 5 (Reuters) - Japan's Nikkei share average closed at a three-month low on Thursday as trade tensions spooked investors while shares of banks and firms that benefit from inbound tourism languished.

Investors were jittery ahead of Friday, when U.S. tariffs on $34 billion of Chinese imports are set to kick in. China has said it will retaliate with tariffs on U.S. products.

As China is "ready to fight back" against the U.S., "so investors are thinking that we cannot avoid it (volatility) tomorrow," said Tsuyoshi Horota, general manager at SMBC Nikko Securities.

The Nikkei ended 0.8 percent lower at 21,546.99, the lowest closing since April 4.

Analysts said that short-term players such as commodity trading advisors sold futures, causing such index-heavyweight stocks as Fast Retailing to decline.

The operator of Uniqlo clothing stores, which fell 2.2 percent on Wednesday after weak June same-store sales disappointed investors, dropped another 2.5 percent. Thursday's tumble took 45 points off the Nikkei benchmark index.

Thursday's losers included companies that benefit from inbound tourism demand as the United States-China trade tension stokes fears that the number of tourists from China to Japan may fall.

Cosmetics maker Shiseido Co plunged 5.0 percent, hotel operator Kyoritsu Maintenance dived 5.3 percent and Japan Airport Terminal, which operates duty-free shops, fell 3.4 percent.

Banks stumbled, hitting the lowest since November 2016. Mitsubishi UFJ Financial Group dropped 0.9 percent, Mizuho Financial Group fell 0.7 percent and Shizuoka Bank shed 1.5 percent.

The retail sector underperformed. Ryohin Keikaku, maker of lifestyle goods sold under the 'MUJI' brand, tumbled 12 percent after its annual operating profit forecast came in below market expectations.

It expects an operating profit of 50 billion yen for the year ending February 2019, compared to 50.7 billion yen estimated by 11 analysts polled by ThomsonReuters Starmine.

The broader Topix dropped 1.0 percent to 1,676.20. (Editing by Richard Borsuk)

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