Japan's Nikkei touches 6-month low, tracking Wall Street's sharp fall

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Japan's Nikkei fell to a six-month low on Tuesday, tracking Wall Street's sharp losses overnight, but it trimmed most of the losses by the close as U.S. stock futures rose.

The Nikkei index fell 0.64% to close at 36,793.11, after falling to as low as 35,987.13, its lowest since September 17.

U.S. stocks plunged on Monday as relentless tariff wrangling and mounting anxieties from a possible federal government shutdown gave rise to fears that the U.S. economy could be careening into recession.

But S&P and Nasdaq futures reversed course in Asia trade, prompting investors to cover their short positions, said Shigetoshi Kamada, general manager at the research department at Tachibana Securities.

"After all, Japan's economy does not seem to decline so investors bought back stocks they sold earlier in the session," said Kamada.

Chip testing equipment maker Advantest reversed its losses to end 1.69% higher, becoming the biggest boost for the Nikkei. Uniqlo-brand owner Fast Retailing also reversed course to rise 0.31%. Technology investor SoftBank Group fell 2.75% to drag the Nikkei the most.

The broader Topix, which had been performing better relative to the Nikkei, fell as much as 3% during the session to hit the lowest since October 28.

The index recovered most of its losses to end 1.11% down to 2,670.72.

Banks, a symbol of value shares that had been rising amid expectations of aggressive Bank of Japan rate hikes, slipped on Tuesday.

Mitsubishi UFJ Financial Group and Sumitomo Financial Group fell 1.4% each. Mizuho Financial Group lost 3.69%.

All but five of the Tokyo Stock Exchange's 33 industry sub-indexes fell, with the brokerage sector losing 2.88% to become the worst performer.

The nonferrous metals sector fell 2.71%, with cable makers Fujikura and Furukawa Electric, a gauge for data centre investments, losing 2% and 4.18%, respectively.

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