TOKYO - Tokyo stocks ended lower Wednesday, as renewed attacks between the United States and Iran pushed up crude oil prices, rekindling concerns about inflation.
The 225-issue Nikkei Stock Average dropped 1,437.91 points, or 2.11 percent, from Tuesday to 66,819.05. The broader Topix index finished 55.83 points, or 1.37 percent, lower at 4,006.43.
On the top-tier Prime Market, the main decliners were precision instrument, nonferrous metal and machinery issues.
The U.S. military said it launched strikes on Iran in response to attacks on tankers in the Strait of Hormuz, pushing crude oil futures higher.
In addition to fears of rising oil prices, lingering concerns about Japan's fiscal health under Prime Minister Sanae Takaichi's "responsible proactive" fiscal policy kept pressure on government bonds.
The yield on the benchmark 10-year Japanese government bond briefly rose to 2.870 percent, marking its highest level since May 1997, according to Japan Bond Trading. It ended at 2.865 percent, up 0.025 percentage point from Tuesday's close.
The U.S. dollar moved narrowly in the lower 162 yen range in Tokyo, as growing uncertainty over the Middle East situation prompted dollar buying.
At 5 p.m., the dollar fetched 162.21-22 yen compared with 162.05-15 yen in New York and 161.96-97 yen in Tokyo at 5 p.m. Tuesday.
The euro was quoted at $1.1425-1427 and 185.33-37 yen against $1.1406-1416 and 184.93-185.03 yen in New York and $1.1425-1426 and 185.05-09 yen in Tokyo late Tuesday afternoon.
In the stock market, sentiment was dampened by concerns that escalating tensions in the Middle East would push up energy prices and hurt corporate earnings, brokers said.
The risk of a surge in oil prices sent auto and airline shares lower after they had recently rebounded on easing concerns over the oil market.
"If investors were overwhelmingly pessimistic, the market would likely be seeing stocks fall across the board," Maki Sawada, a strategist in the Investment Content Department of Nomura Securities, said.
But the reaction in the market Wednesday is "suggesting (the risk of a surge in oil price) is not being viewed as a major negative factor," she added.
Volatility in some heavyweight chip and artificial intelligence shares briefly lifted the Tokyo market into positive territory.
