* Nikkei drops more than 5 pct to lowest since April 2017

TOKYO, Dec 25 (Reuters) - Japan’s Nikkei retreated to a 20-month low on Tuesday after a slide on Wall Street deepened with a series of unnerving U.S. political developments. “But I think that they will get it pretty soon.”

After Bloomberg reported that Trump had inquired about firing Powell, administration officials including Treasury Secretary Steven Mnuchin sought to tamp down the idea, only to have Trump rattle investors again on Monday with a Twitter rant aimed at the Fed. “The more stocks fall, the more investor sentiment gets worse, so there’s more people who need to sell temporarily, such as stop-loss selling.”

The tumult in Washington added to the troubles of investors, who have seen equities worldwide tumble on concerns about a slowing U.S. economy, the pace of the Fed’s rate hikes and the ongoing trade war. The S&P 500 plunged almost 3 percent to close at a 20-month low after news over the weekend that Treasury Secretary Steven Mnuchin called top executives from the six largest U.S. banks to discuss liquidity and a Bloomberg News report that President Donald Trump inquired about firing Fed Chairman Jerome Powell. The president said Tuesday that he has confidence in the “very talented Mnuchin.”

Equities in Shanghai dropped, despite plans by policy makers to improve financing for the private sector and implement tax cuts.
The Nikkei index at the Tokyo Stock Exchange drops 5% to below 20,000, its lowest level since September 2017.