December 6, 2018 / 3:29 AM / a year ago

Nikkei tumbles to 2-week low as Huawei CFO's arrest jolts chip sector

* Tokyo Electron, Sumco among heavy losers after Huawei CFO arrest

* Defense equipment makers soar after CNN reports on unidentified North Korean missile base

By Ayai Tomisawa

TOKYO, Dec 6 (Reuters) - Japan's Nikkei skidded to a two-week low on Thursday, as chip-related stocks were hit after Canada arrested a senior executive of tech giant Huawei in Vancouver at the request of the United States.

Canada's Department of Justice said on Wednesday Huawei's global chief financial officer Meng Wanzhou is now facing extradition to the United States.

The arrest is related to violations of U.S. sanctions, a person familiar with the matter said.

The Nikkei share average tumbled 1.8 percent to 21,514.98 at the midday break after skidding to 21,490.52 earlier, the lowest level since Nov. 22.

Meng's arrest could inflame tensions between China and the United States just days after presidents Donald Trump and Xi Jinping agreed to steps to resolve their trade war at a meeting in Argentina.

"This is really disappointing after the market took the temporary halt to further tariffs between the U.S. and China as a relief early this week," said Takuya Takahashi, a strategist at Daiwa Securities.

Takahashi said the news has had a ripple sell-off effect on the Japanese chip sector.

Sumco Corp tumbled 6 percent, Shin-Etsu Chemical dropped 3.9 percent, Tokyo Electron shed 5 percent and Advantest Corp plunged 5.4 percent.

Falling U.S. futures added to the downbeat sentiment, with S&P 500 e-mini futures off 0.9 percent.

Moving in the opposite direction, defense-related stocks soared after CNN reported that new satellite images obtained by it revealed that North Korea has significantly expanded a key long-range missile base located in the mountainous interior of the country.

Ishikawa Seisakusho surged 5.8 percent, Howa Machinery added 1.8 percent and Hosoya Pyro-Engineering jumped 8.8 percent.

The broader Topix dropped 1.6 percent to 1,613.97. (Editing by Shri Navaratnam)

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