Tokyo shares suffer third day of losses on yen rally

Tokyo shares slumped for a third session Tuesday as a rally in the yen hit exporters ahead of closely watched US and Japanese central bank meetings.

Traders followed their US counterparts in selling equities, with Wall Street retreating from record highs on profit-taking and a drop in crude prices.

While the Federal Reserve, which concludes its meeting Wednesday, is not expected to make any big announcement its statement will be pored over for clues about policy following a run of strong data that have fanned talk of an interest rate rise.

The Bank of Japan, which closes its meeting Friday, is widely considered to be lining up a fresh wave of easing, as the government prepares a promised fiscal stimulus package to kickstart the torpid economy.

Expectations of more BoJ easing increased after government officials warned Tuesday it would miss its own growth projections and fail to balance the books by 2020, as planned.

By the close, the benchmark Nikkei 225 index had dropped 1.43 percent, or 237.25 points, to 16,383.04, while the broader Topix index of all first-section shares was down 1.39 percent, or 18.42 points, at 1,306.94.

Exporters were hit as the dollar nosedived to 104.41 yen from 105.82 yen in New York and 106.11 yen in Tokyo earlier Monday.

The yen is seen as a safe haven in times of uncertainty, but a stronger unit dents the outlook for exporters' profitability.

"A stronger yen and cheaper oil prices are likely to damp investor sentiment," Toshihiko Matsuno, a senior strategist with SMBC Friend Securities, told Bloomberg News.

Japan's earnings season gets into full swing this week with Canon, Nintendo, Nissan, SoftBank, Sony and Japan Airlines among the firms reporting.

Toyota shed 2.51 percent to 5,699 yen and factory robot maker Fanuc was off 1.30 percent at 17,385 yen.

Financial stocks were also hit, with banking giant Mitsubishi UFJ Financial Group down 2.65 percent at 495.4 yen and rival Sumitomo Mitsui Financial Group falling 1.88 percent to 3,116 yen.

Energy explorer Inpex tanked 3.29 percent to 802 yen and refiner JX Holdings lost 1.78 percent to 385.6 yen as oil prices were hit by supply glut woes.

But Nintendo rose 1.59 percent to 23,590 yen after the previous day's nearly 18 percent plunge.

The stock dropped in response to a warning that the success of smartphone game Pokemon Go would not translate into bumper profits for the videogame giant.

Mobile giant SoftBank climbed 2.99 percent to 5,372 yen after shares of its US wireless carrier Sprint soared on a report of a big jump in monthly subscribers.

dhl/pb/dan