Tokyo shares open sharply lower

Tokyo shares opened sharply lower on Wednesday as the yen soared against the dollar on diminishing odds of an early US rate hike.

The benchmark Nikkei 225 index, which closed at a fresh three-month high on Tuesday, lost 1.03 percent, or 175.40 points, to 16,906.58 in the first few minutes of trade.

The broader Topix index of all first-section issues was down 0.99 percent, or 13.40 points, at 1,339.18.

The dollar fell on Tuesday after data showed activity in the US service sector slowed sharply last month, reducing chances of an early rate hike by the Federal Reserve.

The greenback was changing hands at 101.48 yen in early Asian trade on Wednesday, significantly weaker than the 103-yen range seen a day earlier.

A stronger yen is negative for Japanese exporters as it makes their products more expensive abroad and erodes profits when repatriated.

The services report was the latest of a recent string of weaker-than-expected US data.

The report "just confirms the suspicion that as much as the Fed may want to hike this year, the data has to be there," said David Tulk, head of global macro strategy in Toronto at Toronto Dominion Bank, which forecasts no US rate increases this year.

-- Bloomberg News contributed to this story --