By Donican Lam,
Tokyo stocks closed lower Friday, as investors locked in gains amid caution over recent rallies while aggressive rate hikes by overseas central banks also dented sentiment.
The 225-issue Nikkei Stock Average ended down 483.34 points, or 1.45 percent, from Thursday at 32,781.54. The broader Topix index finished 31.77 points, or 1.38 percent, lower at 2,264.73.
Decliners were led by wholesale trade, nonferrous metal and transportation equipment issues.
The U.S. dollar remained firm around the 143 yen line after rising to a new seven-month high of 143.44 yen in Tokyo on prospects of a further widening of the U.S.-Japan interest rate gap.
Dollar-buying continued after U.S. Federal Reserve Chair Jerome Powell reaffirmed in his congressional testimony Thursday that more interest rate hikes are necessary later this year.
At 5.p.m., the U.S. dollar fetched 142.88-90 yen compared with 143.08-18 yen in New York and 141.78-80 yen in Tokyo at 5 p.m. Thursday.
The euro was quoted at $1.0869-0870 and 155.30-34 yen against $1.0950-0960 and 156.71-81 yen in New York, and $1.0994-0996 and 155.88-92 yen in Tokyo late Thursday afternoon.
The yield on the benchmark 10-year Japanese government bond fell 0.005 percentage point from Thursday's close to 0.365 percent, as investors bought the safe-haven debt following a sharp drop on the stock market.
Tokyo stocks opened higher as technology shares tracked overnight advances by their U.S. peers and exporters rose on the weakened yen, but the indexes soon fell sharply amid a sense of caution over an overheated market, analysts said.
The Nikkei extended losses in the afternoon, briefly dropping over 2 percent, with investors eager to lock in gains following new 33-year highs notched last week.
"From Thursday last week to Monday, the Nikkei failed to break through the 33,800 mark, with highs staying in the 33,700 range for three consecutive business days. It seems that investors assessed that this was the upper limit and started selling today," said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management Co.
Concerns about the future of the economy after central banks in major developed countries continued to raise interest rates may have also dented investor sentiment, Ichikawa added.
The Bank of England on Thursday raised its key interest rate by half a percentage point following stronger-than-expected inflation data earlier in the week, with central banks in Switzerland, Norway and Turkey also hiking rates the same day.
Losses in Nikkei heavyweights contributed significantly to the benchmark index's decline for the day, with Fast Retailing, operator of the Uniqlo clothing chain, falling 880 yen, or 2.4 percent, to 36,020 yen, and technology and investment firm Softbank Group dropping 162 yen, or 2.4 percent, to 6,625 yen.
Trading houses in particular saw selling pressure following surges earlier in the week on news that billionaire investor Warren Buffett's Berkshire Hathaway Inc. had raised its stakes in five leading Japanese trading companies.
Among them, Itochu dropped 233 yen, or 4.0 percent, to 5,644 yen, while Marubeni sagged 90 yen, or 3.4 percent, to 2,545 yen.
Bucking the trend of the falling market, Tokyo Electric Power Company Holdings rose 32.8 yen, or 6.3 percent, to 552.8 yen, after the company's president reportedly said Thursday he plans to address issues preventing the restart of the Kashiwazaki-Kariwa nuclear power plant in Niigata Prefecture.
