Tokyo shares slip as strong Yen hits exporters

TOKYO (AFP) - Tokyo shares slipped Thursday morning as fading expectations of an imminent Federal Reserve rate hike sparked a yen rally, hitting exporters including Toyota and Nissan.

Minutes from the US central bank s July meeting said policymakers were keeping their "options open" and that the Federal Open Market Committee remained divided on the near-term danger of inflation.

Its cautious tone did little to raise hopes for a rise in US borrowing costs, which would tend to lift the greenback by stirring demand for dollar-denominated assets.

The greenback fell to 100.05 yen from 100.28 yen Wednesday in New York on the news. In early trade it slumped below 100 yen for the second time this week.

Japanese shares suffer when the yen is stronger against the dollar as it hurts the profitability of Japan s exporters.

"The minutes struck a cautious note against any rushed rate hike decision, while continuing to support the idea of a moderated rate increase," Mitsushige Akino, an executive officer at Ichiyoshi Asset Management, told Bloomberg News.

"The odds are for a December hike, rather than a September one, and the yen looks set to extend gains from here."

By the break, the benchmark Nikkei 225 index fell 0.19 percent, or 31.03 points, to 16,714.61, while the broader Topix index of all first-section shares was down 0.38 percent, or 4.98 points, to 1,306.15.

The Japanese market came under further pressure after fresh data Thursday showed exports slipped in July as shipments of vehicles, ships and steel products fell.

The gloomy figures served as the latest reminder of the impact of a sharp rally in the yen.

Toyota shed 0.58 percent to 5,91 yen by the lunch break, while rival Nissan was down 1.19 percent at 974.6 yen and Mazda slumped 2.26 percent to 1,534.5 yen.

Utilities also dragged the market down, with Fukushima-operator Tokyo Electric Power falling 1.94 percent to 353 yen and Kansai Electric down 2.09 percent at 853.2 yen.

Energy explorer Inpex bucked the downtrend, jumping 1.34 percent to 903.6 yen.