Shares in Asia were mostly lower on Tuesday as traders become increasingly nervous about a political dispute between Tokyo and Beijing.

The benchmark Nikkei 225 index closed down 35 points at 9,123 as markets resumed trading after being closed for a public holiday on Monday. The Hang Seng retreated 56 points at 20,601.

Widespread and at times violent anti-Japan demonstrations erupted over the weekend in China because of a dispute over a group of eight tiny islands in the East China Sea. Protests flared up after Japan's purchase of the islands, over which China claims sovereignty.

While they maybe small, the islands are strategically significant. The islands sit close to international shipping lanes and are also situated in an area highly prospective for oil and gas.

Relations between China and Japan have long been strained and the recent protests in China are also a result of animosity built up over centuries.

Shares of many Japanese manufacturers came under pressure on fears that anti-Japan sentiment in China could hurt sales of Japanese goods in the country.

Reports suggest that Sony, Canon, Toyota and Honda have suspended operations in China on concern that their operations will be targeted by protestors.

Shares of Honda fell 2.5% in Tokyo while Nissan slumped 5%. Fast Retailing sank 7% after reports it had closed several of its stores on mainland China due to anti-Japanese protests.

Panasonic eased 0.7% while shares of Sony managed to resist the downward trend, rising 4% despite a one-day closure of two of its Chinese factories.

Construction equipment maker Komatsu declined 2% after it stopped plant productions at its plants.

In Hong Kong shares linked to Japan suffered heavy selling. Dongfeng Motor, which has several joint ventures with Japanese firms, logged a 5% loss.



CJ

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