TOKYO (Kyodo) — Tokyo stocks slid Tuesday, with the benchmark Nikkei briefly sinking more than 2 percent, as concerns over the yen’s further appreciation against the U.S. dollar grew amid rising expectations of a larger interest rate cut by the Federal Reserve this week.
The 225-issue Nikkei Stock Average ended down 378.54 points, or 1.03 percent, from Friday at 36,203.22. Japanese markets were closed Monday for a national holiday. The broader Topix index finished 15.38 points, or 0.60 percent, lower at 2,555.76.
On the top-tier Prime Market, decliners were led by insurance, bank and electric appliance issues.
The dollar briefly weakened to the lower 140 yen range after rallying from its drop Monday to the 139 yen range. Market participants see an increased chance that Fed policymakers may opt for a half-percentage-point interest rate cut, rather than a quarter-point reduction, at the end of its two-day policy meeting Wednesday, dealers said.
Any rate cut would be the U.S. central bank’s first in four years.
On the Tokyo stock market, financial issues led the overall decline on falls in U.S. and Japanese long-term bond yields. Chip-relates issues took a beating, tracking overnight falls in their U.S. peers.
Exporters were also mostly lower due to concerns over the strengthening yen.
But shares trimmed losses toward the end of trading as investors bought on dips after the Nikkei dropped below the 36,000 mark, brokers said.
“If the U.S. economy is not showing significant weakness but the Fed opts for a half-point rate cut, it could be seen as a strong commitment to supporting growth, which would likely boost stocks,” Masahiro Yamaguchi, head of investment research at SMBC Trust Bank, said.
Concerns over a potential stronger yen could keep pressure on the stock market if the Fed fails to give clear reasons for opting for either a 0.25-point or 0.5-point cut to remove uncertainties over its policy outlook, Yamaguchi said.
==Kyodo
Tokyo stocks slide as US rate cut bets fuel firmer yen concerns
