Tokyo stocks dropped Friday morning after concerns over higher U.S. bond yields hit Wall Street overnight and investors braced for the results of a Bank of Japan policy meeting.

The 225-issue Nikkei Stock Average shed 261.95 points, or 0.87 percent, from Thursday to 29,954.80. The broader Topix index of all First Section issues on the Tokyo Stock Exchange was down 7.52 points, or 0.37 percent, at 2,000.99.

Decliners were led by rubber product, oil and coal product, and service issues.

The U.S. dollar hovered around the 109-yen line as traders remained risk-averse in the wake of overnight declines in U.S. shares, dealers said.

At noon, the dollar fetched 108.99-109.00 yen compared with 108.85-95 yen in New York and 109.20-22 yen in Tokyo at 5 p.m. Thursday.

The euro was quoted at $1.1907-1910 and 129.76-81 yen against $1.1911-1921 and 129.72-82 yen in New York and $1.1946-1948 and 130.45-49 yen in Tokyo late Thursday afternoon.

After an overnight spike in U.S. bond yields dragged down the tech-heavy Nasdaq composite index, the Nikkei briefly sank over 300 points before moving narrowly for the rest of the morning session.

"The Nikkei was knocked by semiconductor-related issues, while investors refrained from making bold moves ahead of the BOJ's policy decision," said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management Co.

News reports have said the central bank may decide to allow long-term interest rates to move in a wider band around its zero percent target and remove its guidance on annual purchases of exchange-traded funds and instead make clear that it would buy ETFs in times of market turbulence.

"If the outcome is as reported, the impact on the market will be limited," Ichikawa said, adding, "I think markets will take it as a technical tweak without changing the framework of monetary easing."

On the First Section, declining issues outnumbered advancers 1,114 to 1,001, while 79 ended the morning unchanged.

Among semiconductor-related issues, Tokyo Electron sank 1,070 yen, or 2.5 percent, to 42,180 yen, Advantest shed 190 yen, or 2.0 percent, to 9,140 yen and Shin-Etsu Chemical fell 240 yen, or 1.3 percent, to 18,565 yen.

==Kyodo

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