Japan's Nikkei heavy as US tariff woes counter China optimism

By Kevin Buckland

TOKYO, May 7 (Reuters) - Japan's Nikkei share average ticked lower on Wednesday, threatening to end a seven-session winning streak, as pharmaceutical shares led losses after U.S. President Donald Trump said he would reveal tariffs on drugs over the next two weeks.

Automaker stocks slumped as Japanese investors returned from a four-day weekend to an overall stronger yen, cutting the value of overseas revenues. Sony Group 6758.T, which runs a movie studio, sank following Trump's announcement of a 100% levy on foreign-made films.

Tariff worries overshadowed any improvement in market sentiment kindled by news that U.S. Treasury Secretary Scott Bessent and chief trade negotiator Jamieson Greer will meet China's economic tsar, He Lifeng, in Switzerland this weekend for talks.

Investors were also reluctant to push the Nikkei above Friday's five-week peak before the conclusion of the Federal Reserve's two-day policy meeting later in the day.

With so many issues regarding tariffs still unresolved, investors are not in a position to chase the market higher, said Nomura strategist Fumika Shimizu.

"The seven-day rally may be acting as a weight on the market."

The Nikkei .N225 ended the morning session down 0.05% after fluctuating in a very narrow range on either side of Friday's closing level.

The biggest drags on the index included Sony and drugmaker Terumo 4543.T, along with heavily weighted Uniqlo operator Fast Retailing 9983.T. Sony lost 3.4%, Terumo declined 2.3% and Fast Retailing shed 1.5%.

Overall, though, the Nikkei's performance was fairly balanced, with 120 of its 225 components rising, 101 falling and four flat.

The broader Topix .TOPX, by contrast, rose 0.4%.

The Nikkei's biggest decliner in percentage terms was Sumitomo Pharma 4506.T, which slumped 6.7%. Peers Otsuka Holdings 4578.T and Eisai 4523.T rounded out the bottom three, dropping 4.9% and 4.4% respectively.

Mitsubishi Motors 7211.T was the worst-faring automaker, sliding 2.7%. Toyota 7203.T lost 2.1% ahead of its earnings release on Thursday.

Trading houses were a bright spot after Berkshire Hathaway affirmed its commitment to investments in those businesses even as Warren Buffett stepped aside as CEO.

Marubeni 8002.T jumped 5.8% and Mitsubishi Corp 8058.T advanced 3.4%.