* Nikkei snaps 3-day winning streak on profit-taking
* U.S. comments on China tariff spark caution on deal
By Hideyuki Sano
TOKYO, Jan 15 (Reuters) - Japanese shares dropped on Wednesday, snapping a three-session winning streak after a top U.S. trade official said current tariffs on Chinese goods would stay for now, prompting investors to lock in profits from recent gains.
U.S. Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer said there was no agreement in place with China on further tariff reductions, taking the shine out of market enthusiasm about the upcoming trade deal. details of the deal are slated to be unveiled at 11:30 a.m. (1630GMT) when the two countries officially sign off on it.
The Nikkei has rallied nearly 20% from its August low on hopes of a truce in the tariff dispute.
But upcoming earnings announcements pose a hurdle as the rally has been driven by a rise in P/E, rather than actual earnings.
The Topix now trades at 14 times over the expected earnings, the highest multiple in almost two years, compared to around 12 just a few months ago.
Expected earnings have declined a little during this period, although they have shown some signs of bottoming out.
"I think the market has already priced in a pretty good scenario. I doubt there will be much upside even if earnings come out pretty strong," said Takuya Hozumi, global investment strategist at Mitsubishi UFJ Morgan Stanley (NYSE: MS ) Securities.
Toho 9602.T fell 5.7% to become the top decliner on the Nikkei after the film and entertainment company's earnings in the three months to January fell short of investors' strong expectations.
Ryohin Keikaku 7453.T fell 3.2% in extremely heavy trade for a second day after the operator of Muji brand shops cut its earnings forecast due to a slump in South Korea and Hong Kong businesses.
More Japanese companies will announce earnings next month.
On the other hand, Aeon 8267.T rose 1.9%, extending gains after the retailer announced the first change in its top leadership in 23 years.
Olympus 7733.T rose 2.3% to a record high amid bullish view on its medical equipment business.
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