* Machinery makers stumble on worries China demand will fall
* Idemitsu, Showa Shell extend gains after merger news on Tuesday
* Shippers underperform as trade fears bite
By Ayai Tomisawa
TOKYO, July 11 (Reuters) – Japan’s Nikkei snapped a three-day winning streak on Wednesday after the United States said it would impose tariffs on an additional $200 billion worth of Chinese goods, hitting shippers and machinery makers hard.
The Nikkei share average ended 1.2 percent lower at 21,932.21 with the index retreating from a 2-1/2-week high hit the previous day after gaining for three straight sessions.
Washington decided to impose the extra tariffs after efforts to negotiate a solution to the trade dispute failed to reach an agreement, senior U.S. administration officials said on Tuesday.
U.S. officials released a list of thousands of Chinese goods on which the administration wants to impose tariffs, including hundreds of food products and tobacco, chemicals, coal, steel and aluminium.
Investors were wary of China’s response after the assistant commerce minister said the proposed U.S. duties would harm the World Trade Organization and globalisation.
“Most of us didn’t expect that the U.S. would disclose a new list that soon, so the stock market had not priced in the U.S. move,” said Shogo Maekawa, global market strategist at JPMorgan Asset Management. “Now the market is cautious on what China will do next. Stocks are expected to be volatile for the time being.”
S&P 500 and Dow futures were down 0.8 percent and 0.87 percent, respectively, pointing to a lower open for Wall Street later in the day.
Escalating trade war tensions took a toll on companies that rely heavily on demand from China.
Shippers were under pressure, with Mitsui OSK Lines and Nippon Yusen both falling 2.2 percent.
Construction equipment makers Komatsu shed 2.5 percent and Hitachi Construction Machinery plunged 3.5 percent.
Machinery makers took a hit with Okuma down 2.0 percent and Makino Milling Machine tumbling 3.6 percent.
Oil refiners Idemitsu Kosan and Showa Shell Sekiyu extended their gains from Tuesday, jumping 9.0 percent and 7.9 percent, respectively, after they agreed to merge on April 1 next year.
The broader Topix declined 0.8 percent to 1,701.88. (Reporting by Ayai Tomisawa Editing by Jacqueline Wong and Eric Meijer)