Tokyo stocks came under renewed pressure Thursday morning, with the Nikkei index briefly sinking over 2 percent, weighed down by overnight losses on Wall Street and concern over the recent upward trend in long-term interest rates in Japan.
The 225-issue Nikkei Stock Average fell 582.40 points, or 1.51 percent, from Wednesday to 37,974.47. The broader Topix index was down 20.01 points, or 0.73 percent, at 2,721.61.
The yield on the benchmark 10-year Japanese government bond at one stage rose 0.025 percentage point from Wednesday's close to 1.100 percent, its highest level in over 12 years, amid speculation that the Bank of Japan will continue reducing bond purchases toward further policy normalization.
The U.S. dollar was firm in the lower 157 yen range after briefly climbing to a one-month high of 157.71 overnight in New York, as long-term Treasury yields advanced amid receding expectations of interest rate cuts by the Federal Reserve at an early date, dealers said.
At noon, the dollar fetched 157.34-35 yen compared with 157.61-71 yen in New York and 157.12-14 yen in Tokyo at 5 p.m. Wednesday.
The euro was quoted at $1.0795-0799 and 169.85-92 yen against $1.0796-0806 and 170.25-35 yen in New York and $1.0851-0852 and 170.50-54 yen in Tokyo late Wednesday afternoon.
A wide range of issues were sold throughout the morning, with the Nikkei index briefly losing over 900 points to fall below the 38,000 threshold. Some blue-chip technology shares were notably weaker following an overnight decline of their U.S. counterparts.
Meanwhile, the rise of the benchmark government bond yield "raised concern about its adverse effect on corporate profits," said Shingo Ide, chief equity strategist at the NLI Research Institute.
Investors are also cautious about a possible interest rate hike by the BOJ at its upcoming monetary policy meetings over the next couple of months, he added.
