China-Linked Shares Open Lower in Tokyo, Overall Market Little Changed - Wall Street Journal

        By Brad Frischkorn and Kosaku Narioka      

TOKYO--Shares of Japanese companies closely tied to China opened lower on Tuesday following recent anti-Japanese demonstrations in Chinese cities, but the broader market largely shrugged off the renewed tensions.

Companies with large operations in China, particularly major automakers, saw sharply lower openings after a market holiday on Monday.

Sentiment has been hit by a wave of sometimes-violent protests in China over a recent escalation in tensions over disputed islands in the East China Sea. There were also concerns that the rallies will gain more momentum on Tuesday, the anniversary of a military incident that led to Japan's 1931 invasion of Manchuria in China, often a flashpoint for violence.

Among those affected were retailers with large operations in China. Fast Retailing Co. (9983.TO), which operates 145 Uniqlo stores in the country, was off 4.3% in early trade. The company said on Monday that it temporarily closed seven stores and expected more to be shut Tuesday. Convenience store operator Seven & I Holdings Co. (3382.TO) was off 0.7% at Y2,306.

Electronics maker Panasonic Corp.(6752.TO) fell 0.9% to Y559 after suspending some of its Chinese operations.

"The extent of the impact on relevant companies' shares, however, will depend on how long the facilities are shut down, and how long the protests last. It's difficult to conceive of this unrest dragging out over a prolonged period of time," said Toshiyuki Kanayama, market analyst at Monex.

"Obviously, it's in everyone's best interest to wind the tensions down, especially given Japan's huge investments and exports to China," says Nicholas Smith, equity strategist at CLSA, noting that China's competitive advantage in providing cheap manufacturing is facing challenges from other nations in the region as well as from Mexico.

The anti-Japanese sentiment is also expected to have a potentially longer-term impact on sales of Japanese goods, particularly autos. Honda Motor Co. said it would halt operations on Tuesday and Wednesday at five plants in the country. The company's shares (7267.TO) were off 2.7% at Y2,600, while Toyota Motor Corp. (7203.TO) was down 0.9% at Y3,185, and Nissan Motor Co. (7201.TO) fell 3.9% at Y709.

Other bellwether manufacturers affected included Komatsu Ltd. (6301.TO) and Hitachi Construction Machinery Co. (6305.TO), off 2.8% at Y1,634 and off 2.6% at Y1,339, respectively.

But the broader market showed a minimal impact. The Nikkei Stock Average was up 0.05% at 9163.45 early in the session.

Growing political tensions between Japan and China "will likely weigh broadly if on-going disputes further escalate," said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.

Write to Brad Frischkorn at bradford.frischkorn@dowjones.com