Japan's Nikkei falls to 2-week low as yen gains after Trump fires Fed's Cook

By Junko Fujita

TOKYO, Aug 26 (Reuters) - Japan's Nikkei share average fell to a two-week low on Tuesday, as the yen strengthened after U.S. President Donald Trump fired Lisa Cook, the first African-American woman to serve as a Federal Reserve governor.

As of 0201 GMT, the Nikkei .N225 dropped 1% to 42,362.99, its lowest since August 12.

The broader Topix .TOPX lost 0.95% to 3,075.95%.

"The market was surprised with the news about Cook and reacted accordingly," said Shuutarou Yasuda, a market analyst at Tokai Tokyo Intelligence Laboratory.

"Also, investors calmed down from the previous session, in which optimism about the Federal Reserve's policy loosening boosted equities. We will have to wait for more data until the Fed's policy decision."

Wall Street stocks ended lower as investors parsed the U.S. interest rates outlook and looked ahead to AI chipmaker Nvidia's NVDA.O quarterly earnings this week. .N

The yen JPY=EBS rose about 0.3% to 147.28 against the U.S. dollar after Trump took the unprecedented action of firing Cook over claims of mortgage borrowing impropriety.

A stronger yen typically weighs on exporters' shares by reducing the value of overseas earnings when converted back into Japanese currency.

Toyota Motor 7203.T and Honda Motor 7267.T slipped 1% and 1.86%, respectively.

Uniqlo brand owner Fast Retailing 9983.T lost 1.69%, while chip-related heavyweights Advantest 6857.T and Tokyo Electron 8035.T shed 1% and 0.49%, respectively.

Online medical services operator M3 2413.T rose 1.49% to lend the biggest boost to the Nikkei.

All but one of the Tokyo Stock Exchange's 33 industry sub-indexes fell. The utility index .IEPNG.T retreated 2.4% to become the worst performer.

Investors, who were late on catching up with the Nikkei's latest rally, seemed to have been buying stocks on dips, which is limiting the declines, Yasuda said.