TOKYO, Jan 18 (Reuters) - Japanese shares reversed course to
close lower on Tuesday, as a jump in U.S. bond yields made
investors cautious, prompting a sell-off in market heavyweights.
The Nikkei share average fell 0.27% to 28,257.25,
after rising as much 0.9% earlier in the session. The broader
Topix dropped 0.42% to 1,978.38.
"Sentiment was weakened by rising U.S. Treasury yields.
Investors thought the U.S. market would fall this evening," said
Shoichi Arisawa, general manager of the investment research
department at IwaiCosmo Securities, adding mixed messages from
the Bank of Japan after its policy meeting also weighed.
The Bank of Japan upgraded its inflation forecasts and
flagged heightening chances the recent commodity-driven price
hikes will broaden, the latest sign of its conviction Japan is
emerging sustainably out of deflation.
U.S. Treasury yields jumped along the curve during Asian
trading hours, lifting the shorter end to new pandemic highs, as
traders braced for the possibility of a hawkish surprise from
the Federal Reserve.
Benchmark 10-year yields rose more than 6 basis
points to 1.8550% and Fed funds futures dived as markets baked
in a hike in March and three more by the end of the year.
Japanese shares traded in positive territory earlier in the
session, tracking a solid finish overnight in European markets.
Uniqlo clothing store owner Fast Retailing ended
2.37% higher, while chip-making equipment maker Tokyo Electron
edged up 0.08%. Technology start-up investor SoftBank
Group gave up its gains to fall 0.4%.
Japanese railway operators climbed 0.59% even as
Tokyo and its surrounding prefectures have sought further
measures from the central government to help counter rising
But airliners gave up early gains to end 0.62%
Steel makers were the worst performers on the Nikkei, with
Nippon Steel tanking 7.08%, JFE Holdings
dropping 6.78% and Kobe Steel falling 6.8%.
(Reporting by Junko Fujita; Editing by Sherry Jacob-Phillips
and Subhranshu Sahu)