Nikkei extends losses after Abe says US-Japan trade pact still not finalised

TOKYO (Reuters) - Tokyo stocks slipped to one-week lows on Thursday, extending losses into the afternoon session as Japanese Prime Minister Shinzo Abe said that a trade pact with the United States hasn't been finalised yet.

Abe's comments came after a meeting with United States President Barack Obama who is on a state visit to Japan.

Some investors had been hoping that a two-way trade deal, seen as crucial to a broader trans-Pacific agreement, could be reached at the meeting.

The Nikkei share average fell 1.2 per cent to 14,367.13 at one point, its lowest level since Thursday last week.

A US-Japan trade deal could benefit Japan's major exporters such as car makers in the medium-term. Abe has touted the broader trade deal as vital for growth in the world's third-biggest economy, but faces tough domestic opposition to opening up agricultural market.

Mollifying Japan's powerful farmers' lobby and completing a successful trade pact is seen as a key test on whether Abe can deliver the third arrow, or structural reform, to go with two others that's already been deployed - fiscal and monetary stimulus measures.

The Nikkei was also under pressure ahead of the looming earnings season and lingering worries over the economic impact of a sales tax hike that kicked in this month.

The broader Topix index fell 0.9 per cent.