Tokyo stocks close down 1.65pc

March 20, 2014 - 9:26:35 am

TOKYO: Tokyo stocks fell 1.65 percent Thursday, following losses on Wall Street after the head of the US central bank indicated interest rates could be hiked earlier than expected.

The benchmark Nikkei-225 index lost 238.29 points to finish at 14,224.23, while the Topix index of all first-section issues eased 1.58 percent, or 18.36 points, to 1,145.97.

Wrapping up a two-day policy meeting on Wednesday, the US Federal Reserve said it would cut a further $10 billion from its monthly stimulus programme, as widely expected.

But Fed chief Janet Yellen rattled markets by saying the timeframe for raising interest rates could be "on the order of around six months" after the stimulus ends.

With the stimulus likely to wrap up by year's end, Yellen's comments suggest a rate hike in early 2015. Expectations had been for an increase late next year.

Higher interest rates are generally a sign of a robust economy but tend to weigh on stock markets.

Hiromichi Tamura, chief strategist for Japan at Nomura Securities, said an April 1 sales tax hike in Japan and concerns about the Chinese economy were also clouding sentiment.

"The fundamentals of Japanese stocks are good, but their prices may struggle to gain for a while," he told Dow Jones Newswires.

The Nikkei is down more than 10 percent since the start of the year, after surging 57 percent in 2013, its best annual run in more than four decades.

In forex trade, the dollar fetched 102.30 yen, slightly down from 102.32 yen late in New York but much stronger than the 101.51 yen in Tokyo earlier Wednesday.

In share trading, Sony climbed 1.50 percent to 1,757 yen after the leading Nikkei business daily reported it would slash its worldwide supplier base to source larger volumes of cutting-edge electronic parts in a bid to lower costs.

Toyota was down 1.50 percent at 5,425 yen after announcing it will pay $1.2 billion to settle US criminal charges for trying to cover up deadly accelerator defects.

Trading giant Marubeni slipped 1.00 percent to 689 yen as the US Justice Department said it had agreed to pay an $88 million penalty after admitting it and employees from consortium partner Alstom had bribed Indonesian officials to secure a lucrative power project.  (AFP)

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