Japan's Nikkei flat as traders brace for potential US tariffs
Updates with Nikkei levels
TOKYO, Jan 21 (Reuters) - Japan's Nikkei share average erased early gains to trade flat on Tuesday, as traders assessed the possibility of U.S. President Donald Trump imposing new tariffs on global firms.
By 0154 GMT, the Nikkei was trading flat at 38,901.44. The index rose as much as 0.86% earlier in the session following overnight news that Trump stopped short of imposing new tariffs.
The broader Topix .TOPX also reversed gains to edge 0.1% lower at 2,708.68.
"Investors who bought stocks after news that Trump would not immediately impose tariffs on imported products but they sold those stocks off immediately after another news about Trump imposing those tariffs soon," said Hiroyuki Ueno, chief strategist at Sumitomo Mitsui Trust Asset Management.
"The market is expected to remain volatile like this for a while as investors monitor outcome of the negotiations on the tariffs. The political factor will become a key for the equities."
Trump said on Monday that he was thinking of imposing 25% tariffs on imports from Canada and Mexico, with the announcement potentially coming on Feb. 1, fuelling concerns that Japanese exports could also be targeted.
Shares of technology start-up investor SoftBank Group 9984.T fell 0.53% to drag the Nikkei the most.
Transport index .ITEQP.T shed early gains to trade flat. Mazda Motor 7261.T fell 2.15% and Honda Motor 7267.T slipped 0.27%.
Investors also await the Bank of Japan's policy decision, due on Friday.
"Investors are seeking to know the pace of the BOJ's rate hike," said Yugo Tsuboi, chief strategist at Daiwa Securities.
"They are now facing uncertainties over Trump administration's policy and the BOJ's rate path," he said.
The BOJ is expected to raise interest rates in a move that would lift short-term borrowing costs to levels unseen since the 2008 global financial crisis.
(Reporting by Junko Fujita; Editing by Subhranshu Sahu and Sherry Jacob-Phillips)
((junko.fujita@thomsonreuters.com;))
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