August 9, 2018 / 3:04 AM / 4 months ago

Nikkei drops on strong yen; auto sector weighs on improper inspection worries

* Pioneer rebounds on business improvement talks

* Auto sector drops 1.1 pct

* Tech shares lose ground

By Ayai Tomisawa

TOKYO, Aug 9 (Reuters) - Japan's Nikkei dropped on Thursday morning as a strong yen hurt investor risk appetite, while the auto sector saw a sell-off on news that some automakers improperly conducted vehicle inspections in the domestic market.

Mazda Motor Corp, Suzuki Motor Corp and Yamaha Motor Co have submitted reports to Japan's transport ministry that they conducted improper fuel economy and emissions tests on their vehicles, the ministry said on Thursday.

Mazda fell 1.3 percent, Suzuki tumbled 6.1 percent and Yamaha declined 4.3 percent, dragging down the transport equipment sector by 1.1 percent.

The Nikkei share average dropped 0.3 percent to 22,576.06 in midmorning trade.

Hurt by trade tensions ahead of the U.S.-Japan talks on Thursday in Washington, the dollar dropped 0.15 percent at 110.78 yen, its weakest in nine days.

"Although the market is not overly concerned that something specific related to Japan will come out, currency investors are risk averse and buying the yen, and stock investors are also refraining from taking large positions," said Isao Kubo, an equity strategist at Nissay Asset Management.

Japan will try to avert steep tariffs on its car exports and fend off U.S. demands for a bilateral free trade agreement at talks on Thursday.

Tech shares lost ground, with Kyocera Corp declining 1.2 percent, Hitachi Ltd dropping 1.8 percent.

Meanwhile, Pioneer Corp soared 14 percent after it said it is talking with firms including Calsonic Kansei on improving its business. Pioneer had tumbled 24 percent over the past two days after the electronic goods maker's net loss widened from the previous year.

Petrochemical business operator Showa Denko soared 7.9 percent after it raised its net profit outlook to 115 billion yen from 85 billion yen for the fiscal year through December.

The broader Topix shed 0.3 percent to 1,739.32.

Editing by Sam Holmes

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