By Hideyuki Sano
TOKYO, Aug 18 (Reuters) - Japanese shares dropped on Tuesday, slipping further away from a near-six-month peak touched last week, as political uncertainties around the world sapped investors' risk appetite.
The yen's rise fuelled profit-taking in a market saddled by its already high valuations as well as rising U.S.-China tensions and uncertainties over U.S. fiscal stimulus.
"The earnings season is over and they weren't really supportive of a strong market rally we have seen. The market has been just bolstered by rally in Wall Street shares," said Masato Kogure, leader of execution group for institutional sales at Tokai Tokyo Securities.
Net profits of listed Japanese firms fell more than 50% from a year earlier in the previous quarter, with only pharmaceuticals and food companies expecting profit growth in the financial year to next March, analysts at Okasan Securities said in a report.
The Topix traded at 16.8 times profits forecast by analysts, near the highest level in a decade.
Some market players also said the news that Japanese Prime Minister Shinzo Abe underwent a medical check-up in hospital on Monday raised worries about his health issues and weighed on the sentiment given his reflationary policy has been a major support for the market. shares .IAIRL.T tumbled 2.4% after they reported weak passenger traffics during the "Obon" holiday period earlier this month due to a rise in domestic COVID-19 infections.
Banks .IBNKS.T fell 2.0% as U.S. bond yields slipped while the yen's rise against the dollar hit exporters, including automaker that had surged earlier this month.
Bucking the trend, the index of Mothers start-up shares .MTHR climbed 2.2% to its highest level since October 2018, on buying by individual investors. (Editing by Rashmi Aich)
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