Tokyo stocks ended lower Thursday after giving up earlier gains, as the yen firmed to a one-month high against the U.S. dollar on growing speculation that the Bank of Japan may end its negative interest rate policy as soon as this month.
The 225-issue Nikkei Stock Average ended down 492.07 points, or 1.23 percent, from Wednesday at 39,598.71, after hitting a record high of 40,472.11. The broader Topix index finished 12.13 points, or 0.44 percent, lower at 2,718.54.
On the top-tier Prime Market, decliners were led by transportation equipment, rubber product and electric appliance issues.
The dollar dropped moderately to the mid-148 yen level in Tokyo, its lowest since Feb. 8, after BOJ policy board member Junko Nakagawa said Japan is making "steady progress" toward achieving the central bank's 2 percent inflation target.
Her remarks reinforced expectations that the BOJ will end its negative interest rate policy later this month or in April, a decision that would mark a departure from years of powerful monetary easing to end chronic deflation, dealers said.
The yen's appreciation dragged down export-related issues, prompting the Nikkei index to reverse course and briefly shed over 500 points in the afternoon after hitting a new all-time high in early trading.
"Her comments came in line with expectations for a BOJ policy change, serving as one of the selling cues," said Maki Sawada, a strategist at Nomura Securities.
Stocks were also sold on caution over high prices following the market's recent rally, Sawada added.
