Japan's Nikkei falls as BOJ policy shift prospects weigh

TOKYO: Japan's Nikkei share average fell further on Thursday as market participants firmed up bets that the Bank of Japan (BOJ) will exit stimulus in coming months.

The Nikkei had slipped 0.4% to 36,070.78 by 0144 GMT, extending losses to a third session. The broader Topix was down 0.28% at 2,522.45.

"Prospects of a BOJ policy tweak weighed on sentiment. The recent Nikkei rally was underpinned by expectations that the BOJ would maintain its ultra-loose policy but that support has now been eliminated," said Shuutarou Yasuda, a market analyst at Tokai Tokyo Research Institute.

"But the index will be supported by demand from investors who were not able to buy stocks during the sharp rally this month."

The Nikkei has risen nearly 8% so far this month, hitting fresh 34-year highs several times, driven by the current BOJ policy, Wall Street's strong performance and a weaker yen.

After the BOJ's two-day policy meeting on Tuesday, Governor Kazuo Ueda said the prospects of achieving the central bank's inflation target were gradually increasing, suggesting that an end to negative interest rates was nearing.

Among individual stocks, Nidec fell 5% to become the worst performer on the Nikkei, after the electric motor maker slashed its full-year operating profit forecast by nearly a fifth.

Staffing agency Recruit Holdings fell 4.86%, dragging the services sector 1.59% lower to make it the worst performer among the Tokyo Stock Exchange's 33 industry sub-indexes.

The brokerage sector rose 1.83% to become the top performing sector, with Daiwa Securities Group up 2.6%.

Chip-related Lasertec jumped more than 3%, after the Philadelphia SE semiconductor index rose to a record high overnight. - Reuters