Japan's Nikkei falls for 3rd day as trade impasse, election weigh on sentiment

TOKYO, July 14 (Reuters) - Japan's Nikkei share gauge slid for a third-straight session 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 closed 0.3% lower, while the broader Topix .TOPX gauge ended 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, these talks could face challenges, as 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 106 advancers on the Nikkei index against 119 decliners. The largest losers by percentage in the gauge were online retailer Mercari 4385.T, down 5.4%, followed by videogame maker Nexon, 3659.T which slid 4.2%.

The largest gainers in the index were major manufacturers Mitsubishi Heavy Industries Ltd 7011.T and IHI 7013.T, both surging more than 3.6%.

Real trade negotiations are likely to be compressed in the period after Japan's upper house election and Trump's latest deadline of August 1, said Weston Nakamura, a markets analyst who publishes the Across the Spread newsletter.

Even so, Japan and South Korea are looking comparatively better after subsequent tariff announcements by Trump, such as 50% against Brazil, he said.

"So, this Monday, Japan and Korea's situation doesn't look so bad anymore," Nakamura said. "They still remain the relatively favoured nations."