Japanese stocks fell mildly on Wednesday, hit by increasing fears of an imminent interest rate rise.
The Nikkei 225 closed down 0.2 per cent to 17,732.77. The broader Topix fell 0.3 per cent to 1,745.92.
The yield on the 10-year Japanese government bond rose 4.5bp, showing rising expectations of higher interest rates.
The Mothers market of smaller growth stocks fell 0.6 per cent – its fifth straight daily fall - amid signs that its recent rise from a May record low was petering out.
The Tokyo Stock Exchange’s Reit index sank 2.5 per cent to 2,354.02, as foreign investors continued to leave the market, worried by high valuations and low Reit yields. The Reit market is particularly sensitive to rises in Japanese government bond yields, since it is primarily a product for yield-hungry investors.
Nippon Building Fund, Japan’s biggest Reit by market capitalisation, was down 1.7 per cent to Y1,720,000.
The overnight fall in US share prices initially hit export-focused sectors, though many of them bounced back in the afternoon to end up on the day.
But the machinery sector still closed 0.5 per cent down.
Elsewhere, a slide in metals prices hit Sumitomo Metal Mining, down 4.2 per cent to Y2,620.
But Sanyo Electric, the troubled electronics maker, rose 2 per cent to Y204 after Merrill Lynch upgraded it to “neutral” from “sell”, saying the company was showing signs of improvement.