Japanese shares drop on worries about COVID-19 resurgence

TOKYO, July 1 (Reuters) – Japanese shares reversed course to trade lower on Thursday on concerns that a resurgence of COVID-19 infections would lead to an extension of restrictions, slowing economic recovery.

The Nikkei share average fell 0.41% to 28,674.52 by 0200 GMT, while the broader Topix was down 0.34% to 1,936.88.

Japan is considering an extension of two weeks to a month for coronavirus prevention measures in Tokyo and other areas, local media said, as new infections in the country’s capital rose to their highest since May 26.

“Investors are holding their bets as they are worried about a resurgence of the coronavirus,” said Shoichi Arisawa, general manager of the investment research department at IwaiCosmo Securities.

“Shares that gained on expectations for an economic recovery in the past month are losing momentum. But some investors are buying equities which are cheap relative to U.S. peers and that is limiting declines.”

Technology stocks led the Nikkei’s fall, with start-up investor SoftBank Group losing 1.41%, chip making equipment maker Advantest falling 1.7% and medical equipment maker Terumo dropping 1.42%.

The sea transport sector fell 3.88% and was the biggest loser among the 33 sector sub-indexes on the Tokyo bourse, with Kawasaki Kisen falling 4.76%, Mitsui OSK Lines losing 4.31% and Nippon Yusen declining 3.73%.

Meanwhile, furniture and home improvement goods store operator Nitori rose 2.14% after posting a record quarterly net profit.

Shin-Etsu Chemical advanced 1.51 % and was the top gainer among the top 30 core Topix names, followed by Recruit Holdings, which rose 0.53%.

Seven & i Holdings Co Ltd slipped 2.04% and was the biggest loser on the Topix 30, followed by Mitsui & Co, which fell 1.28%.

The index of Tokyo Stock Exchange’s second section fell 0.21% and the Mothers Index of start-up firm shares lost 0.3%.

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