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Japanese stocks related to tourism and retail fell on Monday after China warned its citizens not to travel to the country as Tokyo and Beijing remain locked in a row over Taiwan.
Japan's Prime Minister Sanae Takaichi, who has been a vocal critic of China and its military activities in the region, suggested this month Tokyo could take military action if Beijing attacked Taiwan.
Shares in Japanese department stores were hit hard, with the parent company of the Mitsukoshi and Isetan chains plunging by almost 12%. Other well-known brands like cosmetics company Shiseido also fell sharply.
China has consistently ranked among the top sources of tourists visiting Japan.
Shares in department store chain Takashimaya, and the owner of global fashion chain Uniqlo closed more than 5% lower.
Carriers Japan Airlines and ANA Holdings were also down.
Shares in Oriental Land, the theme park company that runs the Tokyo Disney resort, ended the day 5.8% lower.
The share price falls came after the dispute between Beijing and Tokyo has deepened in recent days.
On Sunday, the Chinese government urged its citizens to reconsider studying in Japan, citing risks to their safety and a rise in crimes targeting Chinese people.
China's Education Ministry also told students already based in Japan to closely monitor the security situation.
Last year, more than 100,000 Chinese students were enrolled in educational institutions in Japan, according to a Japanese government survey.
Also over the weekend, Chinese airlines - including China Southern Airlines, China Eastern Airlines, and Air China - offered refunds for flights to Japan.
Takaichi said in the Japanese parliament on 7 November: "If there are battleships and the use of force, no matter how you think about it, it could constitute a survival-threatening situation."
A "survival-threatening situation" is a legal term under Japan's 2015 security law, referring to when an armed attack on its allies presents an existential threat to Tokyo.
In such a situation, Japan's self-defence forces can be called upon to respond to the threat.
Taiwan lies just over 100km (62 miles) south of the closest Japanese island.
A Kyodo news agency poll published on Sunday suggested that the Japanese public is split on whether the country should exercise its right to self-defence if Beijing attacks Taiwan.
Chinese and Japanese officials are expected to hold talks on Tuesday.
Chief cabinet secretary Minoru Kihara said that Beijing's moves are not in line with the "broader direction confirmed between our leaders" in promoting a mutually beneficial and stable relationship.
Beijing sees Taiwan as a breakaway province that will, eventually, be part of the country, and has not ruled out the use of force to achieve this.
But many Taiwanese consider themselves to be part of a separate nation - although most are in favour of maintaining the status quo where Taiwan neither declares independence from China nor unites with it.
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