Japan's Nikkei fell on Monday morning as chip-related stocks weakened, tracking their US peers's declines on Friday, while investors awaited developments from trade talks scheduled between the United States and China this week.

The Nikkei share average dropped 0.2 per cent to 22,230.46 at the midday break. After a plunge in Turkish lira lifted demand for the safe-haven yen, risk sentiment had recovered in the Japanese market last week on news China and the United States will hold lower-level trade talks, raising hopes for a de-escalation in trade tensions.

Reports said that the talks in Washington would take place on August 21 and 22, just before new US tariffs on $16 billion of Chinese goods take effect.

“There are hopes that the trade war could be resolved soon, but at the same time, it's too good to be true if the trade tension will be resolved completely before $16 billion on new US tariffs on Chinese goods take effect,” said Yutaka Miura, a senior technical analyst at Mizuho Securities.

Sumco Corp declined 2.3 per cent, Tokyo Electron shed 1.3 per cent and Advantest Corp dropped 1.5 per cent, after the Philadelphia SE Semiconductor Index dropped 0.7 per cent on Friday. Other exporters also lost ground. Toyota Motor Corp shed 1.0 per cent and Panasonic Corp fell 1.4 per cent.

FamilyMart UNY Holdings tumbled 7.8 per cent after soaring 5.4 per cent in the previous session as investors chased the stock higher after trading house Itochu Corp raised its stake in the supermarket operator to 50.1 per cent from 41.5 per cent. Itochu said 10.9 million shares of FamilyMart were offered in a takeover bid by the wholly owned unit of the company, at a price of ¥11,000 yen per share, from July 17 to August 16.

A fund manager at a Japanese asset management firm said that there were more applicants than the number of shares offered, triggering selling from investors who failed to participate in the takeover bid.

The broader Topix declined 0.4 per cent to 1,691.24.

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