Tokyo stocks dropped Wednesday morning as investors moved to lock in gains after the Nikkei index advanced more than 1,000 points the previous day, while buying of technology heavyweights limited the downside.

The 225-issue Nikkei Stock Average fell 317.02 points, or 0.84 percent, from Tuesday to 37,646.95. The broader Topix index was down 37.48 points, or 1.43 percent, at 2,574.55.

The U.S. dollar remained strong in the mid-150 yen range in Tokyo after hitting a three-month high of 150.88 yen overnight as higher-than-expected U.S. consumer price data lowered market expectations of an early interest rate cut by the Federal Reserve.

At noon, the dollar fetched 150.61-64 yen compared with 150.72-82 yen in New York and 149.58-59 yen in Tokyo at 5 p.m. Tuesday.

The euro was quoted at $1.0707-0710 and 161.26-34 yen against $1.0703-0713 and 161.45-55 yen in New York and $1.0771-0773 and 161.12-16 yen in Tokyo late Tuesday afternoon.

Stocks were also pressured by falls on Wall Street, as the U.S. inflation data fueled prospects of borrowing costs staying higher for longer in the world's largest economy.

But the market's losses were limited, as heavyweight chip-related companies Tokyo Electron and Advantest were sought amid confidence in the semiconductor industry's growth potential from generative AI, analysts said.

"The downside limit of Japanese stocks is incredibly strong," said Kazuo Kamitani, a strategist in the Investment Content Department of Nomura Securities Co. "But investors will need to find incentives other than hopes for AI" for the Nikkei to reach an all-time high above 38,915.87 marked in December 1989.

==Kyodo

© Kyodo News International, Inc., source Newswire