Tokyo stocks fell Tuesday morning as sentiment was dampened by lingering wariness over further interest rate hikes in the United States.

The 225-issue Nikkei Stock Average dropped 298.77 points, or 0.91 percent, from Monday to 32,379.85. The broader Topix index was down 11.69 points, or 0.49 percent, at 2,373.81.

On the top-tier Prime Market, decliners were led by transportation equipment, electric appliance and machinery issues.

The U.S. dollar remained firm in the upper 148 yen range after hitting an 11-month high of 148.97 yen in New York overnight amid expectations that rate differentials between Japan and the United States may continue to widen.

At noon, the dollar fetched 148.89-92 yen compared with 148.83-93 yen in New York and 148.43-45 yen in Tokyo at 5 p.m. Monday.

The euro was quoted at $1.0578-0582 and 157.50-59 yen against $1.0586-0596 and 157.52-62 yen in New York, and $1.0638-0639 and 157.91-95 yen in Tokyo late Monday afternoon.

Stocks were lower from the outset, with investors remaining cautious over further monetary tightening by the U.S. Federal Reserve ahead of a speech to be delivered later in the day by Fed Governor Michelle Bowman, analysts said.

High-tech shares lost ground amid concerns over the U.S. economy's prospects, as the 10-year Treasury yield reached a 16-year high overnight in New York.

"High U.S. interest rates appeared to be weighing on and hurting growth stocks" in Japan, said Kazuo Kamitani, market strategist at Nomura Securities Co.

Among technology shares, semiconductor manufacturing equipment maker Tokyo Electron slid 720 yen, or 3.4 percent, to 20,220 yen, while chip-testing equipment maker Advantest slumped 400 yen, or 2.4 percent, to 16,100 yen.

Meanwhile, the market reacted little to an economic stimulus package for Japan unveiled Monday by Prime Minister Fumio Kishida, who said the measure was partly about easing the burden of inflation, with the plan including boosting a tax cut for companies that raise their employees' pay.

"It depends on what the content of the tax reductions comes to, but they could have a big impact on the market," Kamitani said.


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