The Nikkei 225 average turned lower Tuesday, pressured by selling of heavily weighted component issues.
The Nikkei closed at the day’s low of 14,311.67, down 93.00 points from Friday. The Topix lost 3.64 points to end also at the day’s low of 1,181.64.
The market was closed Monday for Respect for the Aged Day.
The market kicked off the week with modest gains after the U.S. Dow Jones industrial average surged and Germany’s DAX stock index hit a record high Monday.
Behind Wall Street’s strength were growing expectations for the continuation of the U.S. Federal Reserve’s quantitative easing policy after former U.S. Treasury Secretary Lawrence Summers was removed from the list of candidates as the next Fed chairman at his own request.
Investors had been worried that the Fed easing policy would end early if Summers, who is believed to be skeptical about effects of the existing policy pushed by current Fed Chairman Ben Bernanke, assumed the post of top U.S. central banker.
Following Summers’ withdrawal, Fed Vice Chair Janet Yellen is now regarded as the leading candidate.
Yellen, considered to be a policy dove, would be expected to continue the current policy for an extended period if she becomes Fed leader, market sources said.
After ending the morning session slightly higher, however, the Nikkei fell into negative territory in the afternoon, pulled down by selling of heavily weighted key component issues such as mobile phone carriers Softbank and KDDI, brokers said.
Large-lot selling on index futures also dampened cash stock prices, they said, adding that the market was also weighed down by poor performances of Asian equities.
In addition, position adjustment selling hit the market ahead of the Fed’s two-day Federal Open Market Committee meeting from Tuesday, they said.
JGBs up on Fed rumors
Japanese government bonds were higher Tuesday on speculation over the next U.S. Fed chief and drops in Tokyo stocks.
The lead December futures contract on 10-year JGBs closed up 0.07 point from Friday at 143.65. Volume fell to 16,550 contracts from 18,214.
In late interdealer trading, the yield on the latest 330th 10-year JGB issue with a 0.8 percent coupon stood at 0.715 percent.