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Headline indices of the Japan share market were down on Friday, 20 July 2018, on tracking weak cues from Wall Street overnight amid U.S. President Donald Trump's criticism of the Federal Reserve and the latest flare up in trade tensions with the United States after the China central bank set its reference rate to lowest in a year. Meanwhile, yen appreciation against greenback also fuelled selloff.

Among TSE33 issues, 27 issues declined, while 6 inclined, with shares of Nonferrous Metals, Iron & Steel, Marine Transportation, Insurance, Securities & Commodities Futures, and Machinery issues being notable losers, while Air Transportation, Foods, and Electric Power & Gas issues were notable gainers. Around late afternoon, the benchmark Nikkei 225 index declined 0.6%, or 2135.81 points, to 22,628.87. The broader Topix index of all First Section issues on the Tokyo Stock Exchange, meanwhile, fell 0.5%, or 8.28 points, to 1,741.31.

The US President Donald Trump on Thursday criticized Fed policy and expressed concern about the potential impact of rising rates and a stronger dollar on the U.S. economy and American corporate competitiveness.

China's central bank lowered its midpoint for the yuan for the seventh straight trading day and to its lowest in a year. The People's Bank of China set the official mid-point at 6.7671 before the market open, the weakest fixing in a year. With China showing little signs of arresting its currency's depreciation, the yuan promptly retreated to a near 13-month low. There are several channels through which the yuan's weakening is hitting Asian market. First, a weaker yuan challenges the competitiveness of other Asian economies. Second, the weaker currency also causes fears of capital leaving China and disrupting their capital markets, which could have knock-on effects on Asia. Lastly, a weaker yuan deepens trade war concerns.

Shares of steel makers, non-ferrous metal companies and shippers - the regular victims of trade war worries - were key drag on the benchmark index. Kobe Steel dropped after the company was indicted by prosecutors over a data tampering scandal that shook the company last year.

Semi-conductor related shares came under pressure after Taiwan's TSMC, the world's largest contract chipmaker, trimmed its annual revenue and capital spending estimates on bleak demand from smartphone and cryptocurrency mining industries. Tokyo Electron and Sumco both fell as much as 3%.

CURRENCY NEWS: The Japanese yen appreciated against U.S. dollar on Friday, as safe heaven demand resumed after US President Donald Trump expressed concern about the currency's strength and the Federal Reserve's interest rate increases. Against the Japanese yen, the dollar recouped some of its losses after dropping as low as 112.05 yen from a six-month high of 113.18 yen on Thursday. It was down 0.1% on the day at 112.38 yen on Friday.

OFFSHORE MARKET NEWS: US stock market closed down on Thursday, due to negative reaction to disappointing earnings news from several big-name companies. The Dow slid 134.79 points or 0.5% to 25,064.50, the Nasdaq fell 29.15 points or 0.4% to 7,825.30 and the S&P 500 dropped 11.13 points or 0.4% to 2,804.49.

The major European markets closed mixed on Thursday. The U.K.'s FTSE 100 Index inched up by 0.1%, while the French CAC 40 Index and the German DAX Index both slid by 0.6%.

COMMODITY NEWS: Crude oil prices were mixed on Thursday. The Brent crude oil price dropped on rising oversupply concerns and US dollar strength. But Saudi Arabia's OPEC Governor Adeeb Al-Aama said that crude oil exports would fall by around 100,000 barrels per day in August to limit excess production. Brent crude fell by US32 cents or 0.4% to US$72.58 a barrel, but the US Nymex rose by US70 cents or 1% to US$69.46 a barrel.

Base metal prices were down on the London Metal Exchange (LME) on Thursday. Copper (-1.4%) fell below US$6,000 a tonne during the trading session for the first time in 12 months as the US dollar strengthened and concerns over the impact of tariffs on global growth re-intensified. Tin rose by just 0.1%.

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