Japan's benchmark bond yield rose to 1 percent Wednesday for the first time in 11 years amid speculation that the Bank of Japan is moving to normalize its monetary policy, sending stocks lower by fueling concern over higher borrowing costs.
The debt has been sold recently, sending the yield higher, amid expectations that the central bank could further reduce its bond purchases after announcing May 13 that it would buy a smaller amount of bonds in a regular operation.
The benchmark yield briefly rose to 1.000 percent, up 0.020 percentage point from Tuesday's close and touching the 1 percent threshold for the first time since May 2013.
The BOJ's reduction of bond purchases was the first since it ended in March its negative interest rate policy and yield cap program, both key pillars of its unorthodox monetary easing in place for around a decade.
The 225-issue Nikkei Stock Average ended down 329.83 points, or 0.85 percent, from Tuesday at 38,617.10. The broader Topix index finished 22.36 points, or 0.81 percent, lower at 2,737.36.
The U.S. dollar was firm in the mid-156 yen range in Tokyo, with rising Japanese interest rates apparently having a limited impact on the foreign exchange market.
Stocks fell throughout the day, as technology and real estate issues were sold on concerns about higher borrowing costs and housing loans as interest rates continued to rise, brokers said.
On the top-tier Prime Market, decliners were led by electric power and gas, real estate and marine transportation issues.
