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Nikkei Markets

Asian equities fall more as trade worries damp risk appetite

Chinese automakers, real-estate developers drag down A300 index

HONG KONG (Nikkei Markets) -- Asian shares outside of Japan extended losses on Thursday, weighed by weak risk appetite amid lingering concerns over U.S.-China trade relations.

The Nikkei Asia300 Index of companies outside Japan declined 0.5% to 1,273.04, adding to yesterday's 0.6% fall.

Risk appetite for Asian equities was marred following the S&P 500 Index's back-to-back decline. The losses in U.S. stocks came as President Donald Trump reportedly commented yesterday that he had no deadline for levying tariffs on another $300 billion worth of Chinese goods. Those remarks followed statements made earlier this week that he was holding up a trade deal and that he will impose tariffs on more Chinese shipments if President Xi Jinping did not meet him at the G-20 summit in Japan on 28-29 of this month. Beijing has yet to conform the Xi-Trump G-20 meeting.

"Even if a Trump-Xi meeting becomes reality at the end of this month, there is still the risk of both sides agreeing to disagree -- ultimately leading to the heightened trade tensions between the world's two largest economies," said Lukman Otunuga, a research analyst at broker FXTM.

Worries on the trade front eclipsed increased odds of the U.S. Federal Reserve cutting interest rates following lower-than-expected U.S. consumer inflation data. Probability of a rate cut by the Fed next week is 25% now and close to 90% by the July meeting.

Among movers on the A300 index on Thursday, mainland carmakers declined after data on Wednesday showed passenger car sales in China slumped 17.4% in May from a year earlier amid lower production on account of the prolonged weakness in demand. Hong Kong-shares of Great Wall Motor fell 3.6%, Guangzhou Automobile Group dropped 1.3%, and Dongfeng Motor Group shed 2.4%.

Hang Lung Properties extended its losses, falling 1.7%. New World Development lost 0.3%. Bank of America Merrill Lynch said increased political uncertainties were likely responsible for the weakness for Hong Kong property shares. It added that the Sino-American trade war and any potential change of U.S. policy toward Hong Kong were other factors.

People in Hong Kong are protesting against a controversial bill that would allow people to be extradited to other places, including China.

China Life Insurance declined 1.2% amid broad losses on mainland companies. Late yesterday, the company reported a 4.7% increase in accumulated premium income for the January to May period.

Index heavyweights Samsung Electronics, Taiwan Semiconductor Manufacturing, and Tencent Holdings declined by at least 0.9% each after technology names were among the biggest losers on Wall Street yesterday.

LG Chem advanced 3.6%. Chinese carmaker Geely Automobile's unit entered into an agreement with the South Korean company to form a joint venture, which will engage in production and sales of batteries for electric vehicles.

Tata Motors fell 0.9% after the Indian carmaker said global wholesale sales of its U.K. subsidiary fell 23% last month.

--Nimesh Vora

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