This file photo shows the Tokyo Stock Exchange on Oct. 2, 2020. (Mainichi)
TOKYO (Kyodo) -- Tokyo stocks closed lower Thursday, sending the bellwether Nikkei to its lowest level in seven months, on a late tumble in Toyota Motor as well as rising concerns that U.S. stimulus tapering may start earlier than market expectations.
The 225-issue Nikkei Stock Average ended down 304.74 points, or 1.10 percent, from Wednesday at 27,281.17, its lowest closing level since Jan. 6. The broader Topix index of all First Section issues on the Tokyo Stock Exchange finished 26.78 points, or 1.39 percent, lower at 1,897.19.
Decliners were led by iron and steel, marine transportation and mining issues.
The U.S. dollar briefly climbed above the 110 yen line as the unit was bought on speculation the interest rate gap between the United States and Japan will widen, dealers said, citing the U.S. Federal Reserve's July minutes released overnight that showed the tapering of bond purchases could be started this year.
The dollar trimmed gains in the afternoon following a sudden fall in the stock market, they said.
At 5 p.m., the dollar fetched 109.77-79 yen compared with 109.71-81 yen in New York and 109.60-62 yen in Tokyo at 5 p.m. Wednesday.
The euro was quoted at $1.1682-1684 and 128.24-28 yen against $1.1704-1714 and 128.48-58 yen in New York and $1.1723-1725 and 128.49-53 yen in Tokyo late Wednesday afternoon.
The yield on the benchmark 10-year Japanese government bond was unchanged from Wednesday's close at 0.010 percent.
The minutes showed all Fed officials assessed the economy as having made progress toward achieving maximum employment and inflation averaging 2 percent over time. But most Federal Open Market Committee participants judged that growth in new jobs had not yet met the goal.
After moving lower from the opening, the Nikkei fell precipitously at the end of the day when Toyota Motor tumbled on media reports that the automaker will cut its global production by 40 percent in September compared to its initial plan due to a semiconductor shortage.
Toyota Motor was down 430 yen, or 4.4 percent, to 9,295 yen. Among its suppliers, Denso sank 334 yen, or 4.3 percent, to 7,372 yen and Aisin plunged 230 yen, or 5.2 percent, to 4,165 yen.
"Other automakers also met selling as the news fueled a sense of caution that they could face a further output cut given that even Toyota is suffering from the chip drought," said Maki Sawada, a strategist in Nomura Securities Co.'s investment content department.
The coronavirus pandemic has boosted demand for chips, used in everything from laptops and game consoles to cars. Despite the shortage, Toyota Motor reported earlier this month record high sales for the April-June quarter.
Other automakers already struggling with the global chip crunch lost ground, with Nissan Motor down 15.30 yen, or 2.6 percent, to 565.70 yen.
Mazda Motor sank 27 yen, or 2.7 percent, to 970 yen and Subaru skidded 59.00 yen, or 2.8 percent, to 2,066.00 yen.
As for the concern over an earlier-than-expected tapering in the United States, the market "seemed to have digested the scenario of tapering starting this year," said Kenji Abe, chief strategist at Daiwa Securities Co.
Investors were also focusing on the outcome of the Yokohama mayoral election to be held on Sunday as a gauge on the popularity of Prime Minister Yoshihide Suga and his Cabinet, Abe said.
Suga was initially expected to dissolve the House of Representatives in early September for a general election, but speculation is growing the poll will be pushed back due to the Japanese leader's record low approval rating.
His waning fortunes are tied to public frustration about the government's coronavirus response, ruling coalition sources have said.
Japanese share prices tend to rise in the lead-up to lower house elections, Abe said.
On the First Section, declining issues outnumbered advancers 1,798 to 331, while 60 ended unchanged.
Trading volume on the main section rose to 1,076.24 million shares from Wednesday's 946.54 million shares.
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