Japan's Nikkei inched up on Monday, supported by short-covering after falling for six straight sessions, but the gains were limited after US President Donald Trump warned he was ready to slap tariffs on virtually all Chinese imports into the United States.

The Nikkei was up 0.1 per cent at 22,330.19 points by in mid-morning trade, after flitting in and out of negative territory. Trump had ratcheted up trade pressure on China on Friday, threatening duties on another $267 billion of goods in addition to the $200 billion already facing the risk of duties.

“Investors are getting cautious against a possible escalation of the trade conflict, but some are thinking that Trump doesn't want the US stock market to fall before the midterm elections so there are hopes that he will be less provocative from now,” said Hikaru Sato, a senior technical analyst at Daiwa Securities.

The broader Topix was up 0.2 per cent to 1,688.37, with advancing issues outnumbering declining ones 1,227 to 747. Financial stocks gained ground, with the insurance sector soaring 1.5 per cent and the banking sector surging 1.2 per cent. Dai-ichi Life Holdings advanced 2.2 per cent, MS&AD Insurance gained 1.4 per cent and Mitsubishi UFJ Financial Group rose 1.0 per cent.

Index-heavy stocks lost ground. Fast Retailing , operator of Uniqlo clothing stores, shed 1.5 per cent, TDK Corp shed 2.0 per cent and Advantest Corp dropped 2.5 per cent. Meanwhile, entertainment business operator Ateam Inc dived 16 per cent and was the biggest percentage loser on the board after said it expected operating profit to drop 14.9 per cent for the year ending July 2019.

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