U.S. Markets closed

Nikkei little changed as virus fears counter boost from softer yen

TOKYO, Feb 21 (Reuters) - Japanese shares were little changed on Friday as mounting coronavirus cases in China and other Asian countries offset the boost from a weaker yen ahead of a long weekend.

By midday, the Nikkei share average was down 0.28% at 23,413.81, while the broader Topix gained 0.06% to 1,675.41. On the week, the Nikkei was down 1.2% and the Topix dropped 1.6%.

That compared with a fall of 0.2% in U.S. S&P500 and a 0.1% drop in FTSEurofirst, as of Thursday.

"Japan stock ETFs have seen outflows of funds. At the moment, investors favour U.S. and European stocks among the developed markets," said Takeo Kamai, head of execution at CLSA.

The outbreak has already disrupted economic growth in China and a further spread to other countries could derail a "highly fragile" projected recovery in the global economy in 2020, the International Monetary Fund warned on Wednesday.

The epidemic that originated in China appears to be quickly spreading to surrounding countries such as Japan and South Korea, even though recent tallies from China have raised hopes of some stabilisation there.

Railway operators were among the worst-hit sectors this week, falling as much as 3.3%, while airline companies dropped 3.4%.

The worst weekly performer was steelmakers, hit by a surprise decision from industry leader Nippon Steel late last week that it will slash its production capacity by nearly 10%.

Kobe Steel hit a 17-year trough on Friday, following Nippon Steel, which hit similar lows earlier this week.

As more people start to avoid crowds, Tokyo Disney Resort operator Oriental Land Corp lost 2.6%.

On the other hand, internet firms gained as the epidemic is prompting many conferences and seminars to be held online.

Z Holdings rose 4.3%, while Rakuten also gained 4.3%.

The yen's fall, however, helped to lift exporters such as automakers. Toyota Motor rose 0.9%, while Honda Motor gained 0.4%. Transport equipment index added 0.6%.

The yen was headed for its worst week in two-and-a-half years, as worries about the coronavirus' spread in South Korea, Japan and Beijing drove funds from Asia to the towering U.S. dollar.

Trading was slow ahead of a long weekend in Japan as the country gears up to celebrate the birthday of their new emperor on Monday. (Reporting by Hideyuki Sano; Editing by Sherry Jacob-Phillips)