Tokyo stocked closed lower for a third successive day on late selling Thursday as the yen rallied after the Federal Reserve lowered its outlook for further US interest rate hikes this year. Tokyo's loss followed comments by Fed boss Janet Yellen Wednesday that the US economy has stayed "very resilient" in recent months despite slowing global growth, but that challenges abroad remain and require a "slightly more accommodative path".
The Fed's dovish outlook sent the yen surging against the dollar in US trade, with the greenback diving to 112.57 yen from 113.71 yen earlier Wednesday in Asia. On Thursday it extended its losses to 112.16 yen. A stronger yen weighs on the profitability of Japanese exporters and dents demand for their shares. "The fall seems to be more of a speculative move than anything else," Takuya Takahashi, a senior strategist at Daiwa Securities Group, told Bloomberg News.
In Tokyo, the benchmark Nikkei 225 index lost 0.22 percent, or 38.07 points, to close at 16,936.38, reversing earlier gains.
The broader Topix index of all first-section shares was down 0.11 percent, or 1.53 points, at 1,358.97.
Scandal-hit Toshiba plunged nearly eight percent on a report that the company is under investigation by US authorities over allegations it hid $1.3 billion in losses at its nuclear power operations.
Bloomberg News, quoting unnamed sources, reported that the US Justice Department and the Securities and Exchange Commission are examining if any fraud occurred. The firm finished 7.96 percent lower at 191.8 yen. Nintendo lost 3.61 percent to 15,320 yen, despite news that the video game giant on Thursday started distribution in Japan of its first smartphone game - called Miitomo - after years of refusing to stray from a consoles-only policy.
Toyota slipped 0.31 percent to 6,025 yen and Uniqlo-operator Fast Retailing, a market heavyweight, edged down 0.16 percent to 35,850 yen.