Japan's Nikkei end lower as AI stocks tumble, geopolitical risks weigh

By Rocky Swift

TOKYO, Oct 13 (Reuters) - Japan's Nikkei closed lower on Tuesday as a selloff in AI-related stocks gathered pace after weakness in US chip shares, while geopolitical tensions further dampened risk sentiment.

The benchmark Nikkei 225 .N225 fell 1.82% to close at 67,777.52, losing ground for a fourth consecutive session. The broader Topix .TOPX rose 0.14% to 4,110.67.

Weakness in semiconductor stocks weighed heavily on the Nikkei after the Philadelphia Semiconductor Index .SOX fell 1.2% overnight.

Japan's inflation picture also remained in focus, with the Bank of Japan (BOJ) reporting wholesale inflation at 6.8% year-on-year in September, while uncertainty over the US Federal Reserve's next policy move and geopolitical risks in the Middle East and Ukraine kept investors cautious.

Concerns are mounting about whether massive investments in AI hyperscalers will pay off, said Maki Sawada, an equities strategist at Nomura Securities, while the effects of global hotspots on energy prices are also keeping a lid on optimism.

"It's fair to say that today's Japanese stock market is being affected by the downward trend in US semiconductor-related shares," Sawada said. "Concerns have grown regarding the attack on the Saudi Arabian airport and the feasibility of the ceasefire agreement between Russia and Ukraine."

Among Topix industry groups, marine transportation shares topped gainers, rising 3.35%. Nonferrous metals led the laggards, down 4.79%.

There were 156 advancers in the Nikkei 225 against 68 decliners.

The largest losers were Kioxia Holdings 285A.T, down 13.28%, followed by Kokusai Electric 6525.T, trading 9.53% lower, and Sumco 3436.T, which lost 8.64%.

The largest percentage gainers were Pan Pacific International 7532.T, up 4.01%, followed by Sumitomo Heavy Ind. 6302.T, 3.79% higher, and Kawasaki Kisen Kaisha 9107.T, which gained 3.53%.