Tokyo stocks snap 6-day rally as gains locked in after record highs
The 225-issue Nikkei Stock Average ended down 625.41 points, or 1.45 percent, from Wednesday at 42,649.26. The broader Topix index finished 33.96 points, or 1.10 percent, lower at 3,057.95.
On the top-tier Prime Market, notable decliners were machinery, wholesale trade and transportation equipment issues.
The dollar weakened to the lower 146 yen range in Tokyo after U.S. Treasury Secretary Scott Bessent, speaking in an interview, called on the Federal Reserve to cut interest rates by 0.5 percentage point at its policy meeting next month.
The yen was also bought after Bessent said Japan is falling behind the curve in addressing inflation, fueling speculation about a Bank of Japan interest rate hike, dealers said.
On the stock market, investors grew concerned about overheating after the Nikkei benchmark gained nearly 3,000 points over the past six trading days and closed above 43,000 for the first time ever on Wednesday.
Exporter shares also drew selling on the stronger yen, which decreases exporters' overseas profits when repatriated.
"The yen's appreciation provided investors a good excuse to secure profits," said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management Co.
Meanwhile, both trading volume and value were low amid fewer participants during Japan's summer Bon holidays, brokers said.
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