Tokyo stocks fell Wednesday morning, as technology and real estate issues were sold on concerns about higher borrowing costs as the yield on the benchmark 10-year Japanese government bond hit a new 11-year high.
The 225-issue Nikkei Stock Average dropped 227.58 points, or 0.58 percent, from Tuesday to 38,719.35. The broader Topix index was down 14.89 points, or 0.54 percent, at 2,744.83.
The yield on the benchmark government bond briefly climbed 0.005 percentage point from Tuesday's close to 0.985 percent, its highest level since May 2013.
The debt was sold, sending the yield higher, amid speculation that the Bank of Japan could further reduce its bond purchases in its effort to normalize monetary policy, brokers said.
The U.S. dollar was little changed in the lower 156 yen range in Tokyo amid a lack of fresh trading incentives, dealers said.
At noon, the dollar fetched 156.28-31 yen compared with 156.15-25 yen in New York and 156.22-24 yen in Tokyo at 5 p.m. Tuesday.
The euro was quoted at $1.0857-0861 and 169.67-77 yen against $1.0849-0859 and 169.49-59 yen in New York and $1.0864-0865 and 169.72-76 yen in Tokyo late Tuesday afternoon.
Stocks were weighed down by rising Japanese interest rates that would make home loans more expensive and hurt the real estate sector, as the benchmark government yield moved closer to the 1 percent threshold, analysts said.
The benchmark yield reaching 1 percent "would underscore that the BOJ is shifting from its ultraloose monetary policy," said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management Co.
