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Tokyo stocks fall on concerns over early stimulus tapering in US

This file photo shows the Tokyo Stock Exchange. (Mainichi)

TOKYO (Kyodo) -- Tokyo stocks fell Thursday after the U.S. Federal Reserve signaled an earlier-than-expected interest rate hike, raising concerns that stimulus tapering plans would also be moved forward.

    The 225-issue Nikkei Stock Average ended down 272.68 points, or 0.93 percent, from Wednesday at 29,018.33. The broader Topix index of all First Section issues on the Tokyo Stock Exchange finished 12.29 points, or 0.62 percent, lower at 1,963.57.

    Decliners were led by service, precision instrument and pharmaceutical issues.

    The U.S. dollar briefly rose to 110.82 yen, its highest level since April 1, as the unit drew buying on expectations that the Fed's plans will widen the interest rate gap between the United States and Japan, dealers said.

    At 5 p.m., the dollar fetched 110.59-60 yen compared with 110.66-76 yen in New York and 109.93-94 yen in Tokyo at 5 p.m. Wednesday.

    The euro was quoted at $1.1954-1955 and 132.20-24 yen against $1.1990-2000 and 132.75-85 yen in New York and $1.2132-2133 and 133.37-41 yen in Tokyo late Wednesday afternoon.

    The yield on the benchmark 10-year Japanese government bond rose 0.015 percentage point from Wednesday's close to 0.060 percent, as the debt was sold following weak U.S. Treasury bonds overnight.

    Tokyo stocks lost ground throughout the day after the Fed indicated following its two-day policy meeting that it would raise interest rates in 2023, earlier than predicted, although a weaker yen supported export-related shares.

    The outcome fueled concerns that a stimulus tapering in the world's largest economy may take place earlier than expected, though such worries had initially been eased to some extent before the Fed meeting, brokers said.

    "As the market digested the results of the U.S. Fed meeting, stocks are not expected to fall much further," said Masahiro Yamaguchi, head of investment research at SMBC Trust Bank.

    The Nikkei trimmed some losses in the afternoon as the downside was supported by investors scooping up battered down shares, he added.

    Of the 18 Fed policymakers, 13 projected there will be interest rate hikes in 2023 or earlier, compared with seven in the previous estimate in March. Seven of the 13 expected interest rate hikes in 2022.

    The move came as Fed Chairman Jerome Powell noted at a press conference that a strong economic recovery in the United States, which has been battered by the COVID-19 pandemic, was supported by a steady vaccination rollout and implementation of fiscal policies.

    On the First Section, declining issues outnumbered advancers 1,409 to 673, while 111 ended unchanged.

    Softbank Group, whose Vision Fund invests in global technology companies, slipped 112 yen, or 1.4 percent, to 7,897 yen, affected by overnight losses in the technology-heavy Nasdaq index.

    Bucking the downward trend, bank and securities house issues climbed following a rise in long-term U.S. Treasury yields.

    Sumitomo Mitsui Financial Group rose 33 yen, or 0.8 percent, to 3,962 yen, Mitsubishi UFJ Financial Group went up 7.20 yen, or 1.2 percent, to 618.00 yen, while Mizuho Financial Group gained 14.00 yen, or 0.9 percent, to 1,633.50 yen.

    Trading volume on the main section fell to 997.59 million shares from Wednesday's 1,028.48 million shares.

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