Nikkei sheds gains as falling oil prices drag on energy shares

  • Reuters
  • Stock Market News
Nikkei sheds gains as falling oil prices drag on energy shares

* Some positive developments seen in geopolitics

* Oil selloffs weigh on oil-related names

* Airliners gain on cheaper oil prices

* Trading subdued, with U.S, UK markets closed for holidays

By Tomo Uetake

TOKYO, May 28 (Reuters) - Japanese shares gave up initial gains on Monday as a further slide in oil prices pulled down energy-related stocks, offsetting renewed hopes of a U.S.-North Korea summit next month.

The benchmark Nikkei share average .N225 was nearly flat at 22,445.27 points by the mid-morning break, erasing gains of 0.4 percent earlier in the session.

The broader Topix .TOPX slipped 0.2 percent to 1,768.21, with the JPX-Nikkei Index 400 .JPXNK400 edged down 0.1 percent to 15,641.00.

As oil prices extended their sharp declines on Monday O/R , oil refinery and exploration companies were hit hard, with Inpex 1605.T , Japex 1662.T and JXTG 5020.T all shedding between 3.6 and 4.2 percent each.

But lower fuel prices benefitted the air transportation sector index .IAIRL.T , which advanced 1.7 percent.

Although the Nikkei had opened higher on optimism that the historic summit meeting between United States and North Korea may be back on track, most investors were cautious and kept to the sidelines.

"Although there are some new developments in geopolitics -- the revived talks for U.S.-North Korean summit and Italian president's decision to defend the euro -- these are reasons 'not to sell', rather than 'to buy,'" said Yuya Fukue, trader at Rheos Capital Works.

President Donald Trump said on Sunday a U.S. team had arrived in North Korea to prepare for a proposed summit between him and North Korean leader Kim Jong Un, which Trump pulled out of last week before reconsidering. in Italy were also giving investors pause.

While the country's president rejected a eurosceptic pick for the key economy ministry, his decision led to a collapse in efforts to form a coalition government, triggering a possible constitutional crisis and opening the prospect of fresh elections.

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