May 9, 2018 / 2:39 AM / 4 months ago

Nikkei drops after Trump quits Iran nuclear deal; Toyota's results eyed

TOKYO, May 9 (Reuters) - Japanese stocks slipped on Wednesday morning as investors were cautious after U.S. President Donald Trump pulled the United States out of an international nuclear deal with Iran.

The focus locally was on major corporate earnings including from Toyota Motor, which will be released during trading hours for the first time. SoftBank and Mitsubishi Motors will announce their results after the market close.

The Nikkei fell 0.5 percent to 22,399.00 in midmorning trade.

Trump's move raised the risk of conflict in the Middle East, upsetting European allies and casting uncertainty over global oil supplies. The news lifted mining stocks such as Inpex Corp and Japan Drilling by 2.3 percent and 1.6 percent, respectively.

"The short-term impact on the stock market may be limited, but worries over a mid-to-long term impact could lead to a risk-off stance from investors," said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

"If oil prices stay high, costs will rise and that will trigger price increase."

Toyota's full-year result is scheduled to be released at GMT 0425, followed by a press conference. President Akio Toyoda will then talk about the firm's long-term strategy from 0530GMT.

Another potentially market-moving event could be Takeda Pharmaceutical CEO Christopher Weber's press conference at 0300GMT, the day after it agreed to buy Shire for $62 billion.

The M&A news dented the pharmaceutical sector, which tumbled 2.4 percent and was the worst sectoral performer on the board, with traders citing passive investors' selling. Investors will have to reduce weighting of other drugmakers to invest in Takeda, whose market capitalization has ballooned, traders said.

Otsuka Holdings tumbled 4.2 percent, Daiichi Sankyo declined 3.5 percent and Eisai Co shed 1.4 percent.

Elsewhere, Asahi Group Holdings soared 7.5 percent after its January-March net profit jumped 430 percent to 14.8 billion yen.

The broader Topix dropped 0.5 percent to 1,770.77. (Editing by Shri Navaratnam)

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