Tokyo shares fall after North Korea nuclear test

Tokyo - Tokyo shares slipped on Friday morning following a suspected North Korean nuclear test, while the European Central Bank's decision not to ramp up its stimulus also hit sentiment.

North Korea is believed to have conducted a fifth nuclear test, its most powerful to date, South Korea's military said Friday after monitors detected a 5.3-magnitude "artificial earthquake" near its main nuclear site.

The Japanese market edged higher at the start but quickly dipped into the red after news of the possible test.

"We can probably say that the market is reacting a little to signs North Korea conducted a nuclear test," said Soichiro Monji, general manager for the economic research department at Daiwa SB Investments.

"We're not seeing a huge amount of trading on this news, but it does contribute to a slight risk-off mood. The yen is strengthening, and shares aren't managing to rise."

The benchmark Nikkei 225 index fell 32.52 points, to 16 926.25 by the break, while the broader Topix index of all first-section issues was off 4.12 points, at 1 341.83.

US and European shares fell on Thursday after ECB chief Mario Draghi played down the prospect of an increase in asset purchases at a time when concern over the impact of Brexit on the euro area mounts.

Traders are paring bets the Federal Reserve would raise rates at its September meeting while speculation is swirling over whether the Bank of Japan will add to already record stimulus when it meets later this month.

"While the ECB disappointed, we could still expect additional stimulus later in the year as there's so much uncertainty in Europe," said James Woods, a strategist at Rivkin Securities in Sydney.

"Investors will probably sit on the side lines ahead of the Fed and Bank of Japan policy meetings," he added.

In Tokyo share trading, Nintendo lost 1.87% to sit at ¥27 430, after surging 13.2% the previous day on its tie-up with Apple on a Super Mario smartphone game.

In forex markets, the dollar was changing hands at ¥102.03 in midday trade, slipping from ¥102.48 in New York. It was still up from around ¥101.48 in Asia earlier on Thursday.

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