Nikkei hits 2-week low as Sino-U.S. trade frictions persist

* Nikkei sheds 1.21%, Topix loses 0.94%
* Banking, insurers underperform on falling U.S. yields

By Ayai Tomisawa
TOKYO, May 29 (Reuters) - Japan's Nikkei hit a two-week low
on Wednesday as persistent Sino-U.S. trade frictions turned
sentiment against companies with large exposure to China.
Financial stocks also retreated as U.S. treasury yields fell
to their lowest since September 2017 because of the risks posed
to global growth by the trade war between the world's two
biggest economies.
The Nikkei share average .N225 ended the day down 1.21% at
21,003.37, after falling as low as 20,884.61, the lowest level
since May 14.
"Global investors likely decided to unload risky assets as
the status of the U.S.-China trade war has not changed," said
Shoji Hirakawa, chief global strategist at Tokai Tokyo Research
Institute, adding that declining global bond yields were
spooking the market.
Banking and insurer stocks were sold after benchmark U.S.
Treasury yields fell to their lowest levels since September
2017. Mitsubishi UFJ Financial Group 8306.T fell 1.4%,
Sumitomo Mitsui Financial Group 8316.T declined 1.2% and
Dai-ichi Life Holdings 8750.T sank 1.7%.
U.S. President Donald Trump said this week he was "not yet
ready" to make a deal with China, although he expected one could
be reached in the future.
An expanding tariff battle between the two sides has raised
concerns the trade war would lead to a global economic slowdown.
At the same time, Trumped pressed Japan to reduce its trade
imbalance with the United States.
Companies with high exposure to China fell. Construction
equipment maker Komatsu Ltd 6301.T dropped 1%, factory
automation machinery firm Yaskawa Electric 6506.T lost 2.9%
and cosmetics company Shiseido Co 4911.T shed 3.6%.
Among the gainers, Citizen Watch 7762.T rose 0.6% after it
said it will buy back up to 2.2% of its own shares worth 3
billion yen. All but two of the Topix's 33 subsectors were in the red.
Declining issues outnumbered advancing ones 1,541 to 512.
The broader Topix .TOPX dropped 0.94% to 1,536.41.