Japanese shares sluggish as trade impasse, election weigh on sentiment

TOKYO, July 14 (Reuters) - Japanese shares were sluggish on Monday as concerns about an upcoming domestic election and unresolved trade talks with the United States weighed on investor sentiment.

The Nikkei 225 Index .N225 was down 0.2% as of the midday break, poised for a third straight session of decline. The broader Topix .TOPX was flat.

Japanese Prime Minister Shigeru Ishiba has said Japan would continue tariff negotiations with the U.S. after U.S. President Donald Trump last week raised tariffs on Japanese imports to 25% starting August 1. However, prospects of Ishiba's ruling coalition retaining its majority in the upper house after a vote on July 20 are dimming.

"If the ruling party were to lose its majority in the upper house, there is a risk that trade negotiations with the U.S. will be delayed, and market concerns about fiscal expansion will increase," said Nomura strategist Fumika Shimizu.

"I think there is a great possibility that the Japanese stock market will be affected by these developments."

There were 115 advancers on the Nikkei index against 108 decliners. The largest losers by percentage were videogame maker Nexon 3659.T, down 3.6%, followed by chip-industry supplier Lasertec Corp 6920.T, which lost 3.5%.

Nissan Motor 7201.T led gainers on the Nikkei with a 3% advance, recovering slightly from a plunge last week. Mitsubishi Heavy Industries 7011.T followed with a 2.7% gain.