Japan’s Nikkei falls on recession worries; U.S. stock futures drag

TOKYO, June 22 (Reuters) – Japan’s Nikkei index gave up early gains to end lower on Wednesday, as simmering worries about the risk of a recession pushed U.S. stock futures lower after big overnight gains on Wall Street.

The Nikkei share average .N225 fell 0.37% to 26,149.55, after rising as much as 0.82% and hitting its highest in almost a week at 26,462.83.

The index dipped to 26,157.09 at its lowest point on Wednesday, but stayed solidly above the psychological 26,000 level it reclaimed on Tuesday. It bounced from a three-month low just above 25,500 reached at the start of the week.

Of the Nikkei components, 86 stocks advanced against 131 that declined,

The broader Topix .TOPX also gave up early gains to end 0.19% lower at 1,852.65.

U.S. e-mini stock futures EScv1 last pointed to a 1.14% drop, after the S&P 500 .SPX rallied 2.45% overnight.

Most other Asian equity markets fell, including a 1.45% decline for Hong Kong’s Hang Seng .HSI and a 0.51% slide for mainland Chinese blue chips .CSI300.

Market participants said that until there’s confirmation that red-hot U.S. inflation has peaked out, the risk that very aggressive Federal Reserve policy tightening could trigger a recession will keep stock markets heavy.

Some also noted that Japanese stocks have increasingly taken trading cues from U.S. equity futures.

“We’re being pulled by the weakness in U.S. futures again today, making for unsettled price action in the Nikkei,” said a market participant at a domestic asset management firm.

Automakers were among the winners, with the yen near 24-year lows to the dollar — boosting the value of overseas sales.

Toyota 7203.T added 0.82% and Nissan 7201.T gained 2.24%. Nissan alliance partner Mitsubishi Motors 7211.T was the Nikkei’s biggest percentage gainer, up 7.11%.

The biggest points gainer was Uniqlo store operator Fast Retailing 9983.T, contributing 17.56 points to the Nikkei with its 0.72% advance.

Financial conglomerate SBI Holdings 8473.T rallied 2.78% amid media reports that Sumitomo Mitsui Financial Group is in final talks to buy a 10% stake. SMFG 8316.T was 0.02% lower. nL1N2Y80HE

Chip-making equipment makers Tokyo Electron 8035.T was the biggest drag on the benchmark index, losing 3.85%.

(Reporting by Tokyo markets team; Editing by Uttaresh.V)

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