TOKYO - Tokyo stocks plunged Wednesday, with the Nikkei index briefly dropping more than 3 percent, as Japanese government bond yields rose and inflation concerns grew after renewed U.S.-Iran clashes drove oil prices up.
The 225-issue Nikkei Stock Average ended down 1,889.70 points, or 2.85 percent, from Tuesday at 64,325.64. The broader Topix index finished 100.26 points, or 2.40 percent, lower at 4,081.60.
On the top-tier Prime Market, the main decliners were nonferrous metal, service and glass and ceramics product issues.
The U.S. dollar briefly weakened to the mid-159 yen level in Tokyo to fall nearly 1 yen as hawkish Bank of Japan policymaker Hajime Takata stressed the need for an early rate hike, traders said.
At 5 p.m., the dollar fetched 159.69-71 yen compared with 160.16-26 yen in New York and 159.98-160.00 yen in Tokyo at 5 p.m. Tuesday.
The euro was quoted at $1.1577-1579 and 184.88-92 yen against $1.1588-1598 and 185.64-74 yen in New York and $1.1595-1596 and 185.50-54 yen in Tokyo late Tuesday afternoon.
The yield on the benchmark 10-year Japanese government bond ended up 0.020 percentage point from Tuesday's close at 3.010 percent after rising to its highest level since September 1996 of 3.015 percent at one point on growing expectations for the BOJ's interest rate hike later in the month.
All sectors declined in the Tokyo stock market, with investor sentiment dampened by rising bond yields as speculation regarding a September rate hike by the BOJ intensified after U.S. Treasury Secretary Scott Bessent repeatedly pressured Japan to raise interest rates, dealers said.
Heightened tensions in the Middle East, which pushed the benchmark West Texas Intermediate crude oil futures contract above $90 per barrel, also weighed on the market, especially artificial intelligence- and semiconductor-related shares.
The Nikkei stock index slightly extended its losses in the afternoon as the bond yield remained elevated, dealers said.
"Looking at today's moves, the bond yield may be starting to stabilize above 3 percent. If it were to settle at this level, I think that could start to raise concerns about a negative impact on corporate earnings," said Masahiro Yamaguchi, head of investment research at SMBC Trust Bank.
