* Firms with large exposure to China underperform
* Global trade tensions, U.S. foreign policy unnerve market
* Nikkei has dropped 4.0 percent for the week
By Ayai Tomisawa
TOKYO, March 23 (Reuters) - Japan's Nikkei share average tumbled on Friday to its lowest level since mid-October on concerns over escalating global trade tensions that triggered a spike in the yen.
U.S. President Donald Trump signed a presidential memorandum on Thursday that will target up to $60 billion in Chinese goods with tariffs. They will kick in after a 30-day consultation period. benchmark Nikkei .N225 dropped as much as 3.9 percent to 20,745.51, its lowest point since October 10.
That left it nursing losses this week of 4.0 percent, which would be the biggest weekly percentage fall since early February.
Japanese companies with high exposure to the world's second-biggest economy fell sharply.
"The market started to worry how the global trade tensions will affect the real economy, and right now people are avoiding risks," said Masahiro Yamaguchi, a senior market analyst at SMBC Trust Bank.
News that Trump replaced H.R. McMaster as national security adviser with John Bolton, a hawk who has advocated using military force against North Korea and Iran, also hurt investor sentiment.
"Uncertainty over foreign policy of the Trump administration is increasing and it may last for a while," Yamaguchi said.
The dollar fell as low as 104.635 yen in early Asian trade on Friday, its lowest level since November 2016, stoking concerns that the Japan'ese currency's strength will sap the earnigns of Japanese companies.
Analysts said a strong yen would impact profits of exporters, but companies were still likely to post growth next fiscal year as long as the global economy continues to expand.
"At this dollar-yen level, it makes sense that the market is worried. But the economy is strong so far," said Kazuhiro Takahashi, an equity strategist at Daiwa Securities.
Even if the dollar trades at 105 yen throughout the next fiscal year starting in April, companies are expected to post a 6.2 percent rise in their pre-tax profits, Takahashi said.
The broader Topix .TOPX declined 2.6 percent to 1,683.00, with 32 of its 33 subsectors in negative territory.
Add Chart to Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
- Enrich the conversation
- Stay focused and on track. Only post material that’s relevant to the topic being discussed.
- Be respectful. Even negative opinions can be framed positively and diplomatically.
- Use standard writing style. Include punctuation and upper and lower cases.
- NOTE: Spam and/or promotional messages and links within a comment will be removed
- Avoid profanity, slander or personal attacks directed at an author or another user.
- Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
- Only English comments will be allowed.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.