Tokyo stocks close lower

TOKYO — Tokyo stocks tumbled more than 2 per cent on Wednesday in their biggest single-day drop this year, mirroring selling across Asian markets after Fitch cut the United States' AAA credit rating.

The benchmark Nikkei 225 index dropped 2.30 per cent, or 768.89 points, to 32,707.69, while the broader Topix index ended down 1.52 per cent, or 35.60 points, at 2,301.76.

Hours before the Tokyo market opened, Fitch downgraded the United States' top-notch credit rating by a step, citing a growing federal debt burden and an "erosion of governance" that has manifested in debt limit standoffs.

Overnight on Wall Street, the broad-based S&P 500 shed 0.3 per cent, and the tech-heavy Nasdaq fell 0.4 per cent, while the Dow gained 0.2 per cent.

"Fitch's downgrade and rise in yields of US bonds led to selling in US high tech shares. That, in turn, weighed on the Tokyo market," Toyo Securities senior strategist Ryuta Otsuka told AFP.

"In addition to falls in US high-tech shares, rise in yields of long-term bonds in the domestic market is also accelerating stocks selling," Daiwa Securities said in a commentary. 

Japan's 10-year bond yield hit a nine-year high of 0.625 per cent on Wednesday, Jiji Press reported, reflecting the Bank of Japan's tweak last week to part of its policy tools to maintain ultra-loose monetary policy. 

The dollar fetched 142.89 yen in Asian trade, against 143.34 yen in New York late Tuesday.

Among individual equities, Uniqlo operator and market heavyweight Fast Retailing dropped 3.90 per cent to 34,530 yen, SoftBank Group lost 3.68 per cent to 6,983 yen and chip-testing equipment maker Advantest sank 4.48 per cent to 19,400 yen.

Toyota climbed 2.33 per cent to 2,502.5 yen after having gained 2.49 per cent in the previous session following its announcement of better-than-expected financial results.