Tokyo stocks fell Wednesday morning as some exporters were sold on a firmer yen amid growing speculation that the Bank of Japan could end its negative interest rate policy at its meeting next week.
The 225-issue Nikkei Stock Average fell 161.39 points, or 0.42 percent, from Tuesday to 38,636.12. The broader Topix index was down 10.25 points, or 0.39 percent, at 2,646.99.
The U.S. dollar weakened to the lower 147 yen range in Tokyo on yen buying after major Japanese firms offered the largest pay hikes in decades in annual wage talks, in a move that could pave the way for the BOJ to shift from its years of aggressive monetary easing.
At noon, the dollar fetched 147.35-40 yen compared with 147.60-70 yen in New York and 147.33-35 yen in Tokyo at 5 p.m. Tuesday.
The euro was quoted at $1.0925-0929 and 160.98-161.09 yen against $1.0921-0931 and 161.29-39 yen in New York and $1.0932-0933 and 161.07-11 yen in Tokyo late Tuesday afternoon.
Stocks opened higher on buying of technology issues tracking gains in their U.S. counterparts overnight. But gains were erased as the yen strengthened on speculation about the BOJ's policy change after news that companies such as Toyota Motor Corp. and Nippon Steel Corp. agreed to increase wages significantly, brokers said.
Rising wages would be seen as positive for the overall economy, leading to expansion in personal spending and helping Japan to emerge from deflation, said Maki Sawada, a strategist in the Investment Content Department of Nomura Securities Co.
"But a firming yen tends to stir caution over deteriorating earnings of export firms, bringing down stocks," she said.
