Nikkei hits 1-1/2 week low on China-US tensions, firmer yen

Japanese shares slid to a 1-1/2 week low on Monday as worries over worsening ties between China and the United States soured investor mood, and a firmer yen weighed on exporters.

The benchmark Nikkei 225 index fell 0.16 percent at 22,715.85, it's lowest closing since July 17.

Shares pared losses in the afternoon, however, as traders speculated the Bank of Japan would buy ETFs after a weak morning session.

Market sentiment continued to be hit by further deterioration in Sino-US relations, following the tit-for-tat closures of consulates in both countries.

The tense backdrop underpinned the safe-haven yen, with the currency rising as high as 105.38 yen to the dollar, a level unseen since March 16.

Exporters Mitsubishi Motors shed 3.24 percent, Toshiba Corp declined 2.16 percent and Honda Motor Co Ltd dropped 0.54 percent.

Among other individual shares, defence-related names gained due to tensions between the two largest economies.

Mine manufacturer Ishikawa Seisakusho Ltd rallied 6.23 percent, while flare manufacturer Hosoya Pyro-Engineering Co Ltd added 7.57 percent.

The largest percentage loss in the index was Nikon Corp , which fell 7.15 percent after Intel Corp shares signalled it may stop manufacturing its own chip components.

Other semiconductor-related companies were also bruised, with Screen Holdings Co Ltd slipping 1.81 percent, while Disco Corp and Alps Alpine Co Ltd lost 2.22 percent and 3.59 percent, respectively.

The broader Topix recouped its early losses to close up 0.24 percent at 1,576.69.