Japan's Nikkei falls as autos lead losses on Trump's tariffs woes

TOKYO, March 27 (Reuters) - Japan's Nikkei share average declined more than 1% on Thursday, with automakers leading the losses, as concerns over the potential impact of U.S. President Donald Trump's auto tariff announcement weighed on sentiment.

By 0028 GMT, the Nikkei .N225 was down 1.1% at 37,624.08, with the auto sub-index .ITEQP.T sliding 3%.

The broader Topix .TOPX slipped 0.53% to 2,797.88.

Trump on Wednesday unveiled a 25% tariff on imported cars and light trucks starting next week, escalating the global trade war he reignited upon regaining the White House this year. Auto industry experts expect the move will drive up prices and disrupt production.

"The market reaction was limited because the tariff announcement was within expectations," said Hiroyuki Ueno, chief strategist at Sumitomo Mitsui Trust Asset Management.

"Investors probably expect that Trump will not do anything that could seriously hurt the economy."

Shares of Toyota Motor 7203.T lost 3.4% to become the biggest drag for the Topix. Honda Motor 7267.T fell 2.8% and Nissan Motor 7201.T slipped 2.6%. Mazda Motor 7261.T lost 6.4% to become the worst performer in the Nikkei.

The decline in shares was also limited by expectations of strong demand for Nikkei and Topix futures, said Seiichi Suzuki, chief equity market analyst at Tokai Tokyo Research Institute.

Thursday is the last day to secure dividend payouts for companies whose fiscal year ends in March.

Dividends will not be distributed until companies hold their annual shareholders' meetings in June, but passive investors are eager to invest the cash in advance by purchasing futures to avoid tracking error — the unwanted performance difference between an ETF and the index it tracks.

"If there had not been the demand for the futures, the market could have fallen further all day," Suzuki said.

Chip-testing equipment maker Advantest 6857.T lost 6.59% to become the biggest drag for the Nikkei.

Online medical services operator M3 Inc 2413.T rose 2.61% to provide the biggest support for the Nikkei.