TOKYO: Japan's Nikkei fell to a one-month low on Friday as semiconductor-related shares tumbled after Morgan Stanley downgraded its view on the U.S. chip sector, which offset any boost from Japan's better-than-expected economic growth.
The Nikkei share average ended 1.3 per cent lower at 22,298.08, the lowest closing level since July 12. For the week, it dropped 1 per cent.
In late trade, selling in stocks accelerated after the yen rose against the dollar as investors became risk averse.
The Turkish lira hit an all-time low of 5.75 on Friday after a meeting the day before between a Turkish delegation and U.S. officials in Washington yielded no apparent solution to a diplomatic rift over the detention in Turkey of a U.S. pastor.
The dollar dipped 0.1 per cent to 110.98 yen, nudged off a session-high of 111.165.
Chip equipment makers Tokyo Electron dropped 3.6 per cent, Advantest Corp fell 4.9 per cent and Screen Holdings shed 3.9 per cent, while silicon-wafer maker Sumco Corp tumbled 4.7 per cent.
Morgan Stanley cut its outlook for the U.S. semiconductor industry to "cautious" from "in-line," saying it could not see much upside to its estimates partly due to increasing trade tensions.
Investors are keeping an eye on Japan's trade talks in Washington. Both Japan and the United States failed to reach an agreement in talks on Thursday between U.S. Trade Representative Robert Lighthizer and Japanese Economy Minister Toshimitsu Motegi, who stuck to Tokyo's position that it preferred multilateral free-trade agreements over bilateral ones.
"What is crucial for Japan is whether there will be an impact to its auto sector. Right now it's hard to make an investment decision so we need to wait till next week to digest the outcome of the talks," said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities.
Apart from chip-related stocks, Friday's losers included insurance shares and shippers. Dai-ichi Life Holdings shed 3.3 per cent and Mitsui OSK Lines fell 2.1 per cent.
Meanwhile, Fujifilm Holdings soared 3.5 per cent after the company said it would buy back up to 100 billion yen of its own stock.
On Friday, data showed Japan's economy bounced in the second quarter from a contraction in the previous quarter, in a sign its recovery momentum remained intact.
The preliminary reading for second-quarter gross domestic product compared with a median estimate for a 1.4 per cent in a Reuters poll of economists.
The broader Topix dropped 1.2 per cent to 1,720.16.