Tokyo equities bruised by Japanese rate fears; steady U.S. rates spur some bourses to records
TOKYO -- Japan's stock market slid 2.4% Wednesday, ignoring what should have been good news -- a weaker yen -- and focusing instead on fears that the Bank of Japan may soon increase interest rates.</br></br>The Nikkei 225-stock index lost 490.85 points to 19841.98. That followed a 156.92-month. In trading Thursday, the Nikkei fell 138.61 points to close the morning session at 19703.37. Wednesday's first-section volume was estimated at 430 million shares, down from 437.3 million shares Tuesday. Losers overwhelmed gainers, 886-245. The Tokyo Stock Price Index, or Topix, of all first-section issues tumbled 27.57 points, or 1.8%, to 1475.99.</br></br>Stocks dropped even as the dollar rose to 114.35 yen in late Tokyo trading from 112.55 a day earlier. Normally, a drop in the yen is good news for Japanese stocks, because if that weakness persists, it can make Japanese goods less expensive in dollar terms overseas. Investors are keen to see a slightly weaker yen these days, after its surge against the dollar; only three weeks ago, the dollar traded at 127.37 yen.</br></br>But Tokyo investors Wednesday were paying more attention to rumors that Japanese interest rates might soon risesomething that could hurt Japanese stocks by attracting money into fixed-income instruments and by raising borrowing costs for Japanese companies. The banking sector lost 2.1% to foreign selling. Securities firms shed 1.9%.</br></br>A Japanese news report Tuesday said Toshihiko Fukui, vice governor of Japan's central bank, was "not uncomfortable" with a suggestion by Japan's trade unions that interest rates should rise. Stocks fell on the report, despite the announcement by the Bank of Japan later in the day that Mr. Fukui had merely shown "understanding" for the request, while emphasizing the need for a cautious approach.