February 8, 2019 / 2:34 AM / 7 months ago

Nikkei drops to near 3-week low as U.S.-China trade fears hit

* Nikkei has dropped 2 pct this week so far

* Nikon tumbles 11 pct as it lowers imaging business' forecast

* Sony soars after announcing share buyback

By Ayai Tomisawa

TOKYO, Feb 8 (Reuters) - Japan's Nikkei dropped to a near three-week low on Friday morning as renewed U.S.-China trade fears curbed risk appetite, while dismal earnings results from Japan Inc. continued to sour sentiment.

The Nikkei share average sank 1.9 percent to 20,353.40 in midmorning trade, the lowest level since Jan. 17. For the week, the Nikkei is on track to post a 2 percent decline.

U.S. President Donald Trump said he did not plan to meet with Chinese President Xi Jinping before the March 1 deadline set by the two countries for reaching an agreement.

"Investors are getting nervous since the market had been optimistic about a resolution of the trade dispute since the beginning of the year," said Shusuke Yamada, chief Japan FX strategist at Bank Of America Merrill Lynch.

The Japanese market was already under pressure with bluechip companies cutting their forecasts.

According to Daiwa Securities, of 200 major companies that the brokerage covers, 117 companies had reported their third-quarter results as of Feb. 6. A total of 31 companies cut their annual forecasts on a pretax profit basis, Daiwa said.

On Friday, Nikon Corp dived 11 percent after the company cut its annual operating profit forecast for its imaging business on struggling camera and chip equipment operations, which have been hit by falling demand in China.

Investors' risk-averse stance dragged down cyclical stocks such as machinery firms which have large exposure to China. Fanuc Corp tumbled 3.7 percent, Komatsu Ltd tanked 3.1 percent and Hitachi Construction Machinery plunged 3.8 percent.

Bucking the weakness, Sony Corp soared 5 percent after it announced a share buyback of 100 billion yen ($910 million) - its first ever aimed at boosting shareholder returns.

The broader Topix declined 1.8 percent to 1,541.11, with all of its 33 subsectors in negative territory.

Declining issues outnumbered advancing ones 1,735 to 340.

Editing by Sam Holmes

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