September 27, 2018 / 2:38 AM / 2 years ago

Nikkei edges up in choppy trade; automakers soar after Japan dodges further tariffs

* Some players remain cautious on auto tariff deal - analyst

* Nitori tumbles after pricing in strong operating profit

By Ayai Tomisawa

TOKYO, Sept 27 (Reuters) - Japan's Nikkei edged higher in choppy trade on Thursday as automakers rose after the United States indicated it won't impose further tariffs on Japanese automotive products for now, but gains were limited as investors remained cautious.

Nikkei share average edged up 0.1 percent to 24,063.45 in midmorning trade, after opening a tad lower.

U.S. President Donald Trump and Japanese Prime Minister Shinzo Abe agreed on Wednesday to start trade talks in an arrangement that, for now, protects Japanese automakers from further tariffs, seen as a major threat to the export-dependent economy.

In the choppy market, where declining issues outnumbered advancing ones 1,128 to 866, the auto sector was the biggest gainer on the board, rising 1 percent. Toyota Motor Corp rose 1.0 percent, Mazda Motor Co added 1.7 percent and Subaru Corp soared 4.1 percent.

Analysts said that investors welcomed the news, while some of them are looking at the developments cautiously.

"We can't be overly optimistic about the news. The U.S. says it would refrain from imposing new tariffs on Japanese autos 'while the talks are under way' so this is not the final decision," said Shoji Hirakawa, chief global strategist at Tokai Tokyo Research Institute.

The weakness in U.S. stocks overnight led to a pause in the Japanese market, where the Nikkei rose for eight straight days.

A Wall Street rally fizzled and stocks turned negative shortly before the market close on Wednesday after investors reassessed the U.S. Federal Reserve's policy statement and reduced their risk as they weighed how long the U.S. central bank would continue to raise interest rates.

The Fed raised interest rates for the third time this year, and suggested a steady path of more rate rises. It also dropped a reference in its statement to the word "accommodative," though Fed Chairman Jerome Powell later said policy was still accommodative.

"The market seems to have been sensitive about the outcome but it's not uncommon to see a market exhausting gains after a rate hike news is priced in," said Hikaru Sato, a senior technical analyst at Daiwa Securities.

Discount furniture store operator Nitori Holdings tumbled 5.8 percent although its operating profit for the March-August period rose 16.1 percent on the year to 55.8 billion yen, even topping its own forecast of 52.9 billion yen. According to traders, investors took profits as they looked to negative factors such as the company's revised plan to open fewer-than-expected stores in China compared to its initial plan.

The broader Topix dropped 0.1 percent to 1,820.81. (Editing by Shri Navaratnam)

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