Tokyo stocks extended their losses Thursday morning amid expectations of prolonged U.S. monetary tightening, while the 10-year Japanese government yield hit its highest level in over nine years.
The yield on 10-year Japanese government bonds rose to 0.650 percent, the highest level since April 2014, tracking a rise in long-term U.S. Treasury yields. The 10-year yield has been climbing since the Bank of Japan decided last week to allow it to rise above a 0.5 percent cap toward 1.0 percent.
The 225-issue Nikkei Stock Average fell 463.61 points, or 1.42 percent, from Wednesday to 32,244.08. The broader Topix index was down 26.77 points, or 1.16 percent, at 2,274.99.
On the top-tier Prime Market, decliners were led by nonferrous metal, rubber product and transportation equipment issues.
The U.S. dollar was flat in the lower 143 yen level in Tokyo after rising overnight on expectations of further interest rate hikes by the U.S. Federal Reserve following stronger-than-expected private sector jobs data, dealers said.
At noon, the dollar fetched 143.30-31 yen compared with 143.30-40 yen in New York and 142.63-65 yen in Tokyo at 5 p.m. Wednesday.
The euro was quoted at $1.0934-0937 and 156.67-74 yen against $1.0933-0943 and 156.75-85 yen in New York, and $1.0990-0991 and 156.76-80 yen in Tokyo late Wednesday.
The Nikkei at one stage lost over 500 points, tracking overnight declines on Wall Street, as U.S. employment data released by payroll processor ADP suggested the country's economy is strong, fueling speculation the Fed could raise interest rates again this year, analysts said.
"Investors may become wary of further rate hikes, if employment data and other economic indicators to be released through September suggest an acceleration of inflation again," said Koichi Fujishiro, a senior economist at the Dai-ichi Life Research Institute.
Heavyweight semiconductor issues fell, tracking their U.S. counterparts. Tokyo Electron dropped 330 yen, or 1.6 percent, to 20,815 yen, while chip-testing equipment maker Advantest fell 540 yen, or 2.8 percent, to 18,860 yen.
Bucking the downward trend, Kawasaki Kisen soared 168 yen, or 3.8 percent, to 4,535 yen, a day after the marine transportation company said it would buy back shares worth up to 60 billion yen.
© KYODO