The central bank took the market by surprise last month with its decision to allow long-term interest rates to move in a broader range, a move many market players saw as an effective interest rate hike.
The 225-issue Nikkei Stock Average index stumbled 297.20 points, or 1.14%, to finish at 25,822.32. The broader Topix index of all First Section issues on the Tokyo Stock Exchange declined 16.77 points, or 0.88%, to 1,886.31.
Automakers and precision instrument manufacturers were lower on the yen's strength, while bank stocks also dropped on profit-taking.
ECONOMIC NEWS: Japan Producer Prices Rise 0.5% In December- Producer prices in Japan were up 0.5% on month in December, the Bank of Japan said on Monday - slowing from the upwardly revised 0.8% increase in November (originally 0.6%). On a yearly basis, producer prices jumped 10.2% - up from the upwardly revised 9.7% spike in the previous month (originally 9.3%). Export prices were flat on month and up 1.3% on year, the bank said, while import prices eased 0.1% on month and climbed 8.1% on year last month.
CURRENCY NEWS: The yen stood at 128.24 against US dollar, depreciated 0.29% from previous day close of 127.83, after trading in the range between 127.24-128.20. The yen has appreciated rapidly on signs the US Federal Reserve will slow its rate hikes and the Bank of Japan's decision last month to pivot away from its long-standing ultra-loose monetary policy. The Japanese central bank said it would loosen its grip on yields and allow those on certain government bonds to move in a wider band.
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