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TOKYO: Tokyo stocks dropped Thursday as the mounting crisis engulfing Donald Trump's presidency raised more questions about the future of his economic agenda, which has been credited for helping fan a global rally.

The benchmark Nikkei 225 index fell 1.32 percent, or 261.02 points, to end the day at 19,553.86, while the Topix index of all first-section issues lost 1.32 percent, or 20.81 points, to close at 1,555.01.

Reports that Trump asked former FBI chief James Comey to stop a probe into ex-national security advisor Michael Flynn over his contacts with Russia stoked questions about how an embattled White House will advance tax cuts and other growth measures.

Hopes that the tycoon's agenda would fire the US economy helped propel a surge in global stocks and the dollar in the months after his election.

The uncertainty pushed down the dollar against the safe-haven yen, which acts as a benchmark for investor confidence.

A pick-up in the yen is a negative for Japanese shares because it hurts the profitability of the country's major exporters.

The dollar sank as low as 110.54 yen from 110.96 yen in New York and is well off the levels above 114 yen last week.

In afternoon trade, the greenback rebounded to 111.21 yen.

"Suspicions surrounding Trump have sent a shock wave through global financial markets and today will be about testing fresh lows," Juichi Wako, a senior Nomura strategist in Tokyo, told Bloomberg News.

"Odds are for this awkward political situation to drag on until the end of this month, with woes growing that the implementation of US tax cut policy will be delayed for quite a bit."

The crisis saw the Dow on Wall Street suffer its biggest one-day decline since Trump's November election win.

Tokyo's drop came despite upbeat Japanese data that showed the world's number three economy posted another quarterly rise in growth, marking its longest expansion in more than a decade.

Exporters struggled with Panasonic down 1.17 percent at 1,340 yen and camera maker Olympus dropping 4.60 percent to 4,140 yen.

Sony slumped 2.25 percent to 3,942 yen, and Hitachi fell 1.84 percent to 663.7 yen.

Banks were also lower. Mizuho Financial fell 2.32 percent to 193.4 yen and Mitsubishi UFJ dropped 4.04 percent to 680.8 yen.

Copyright AFP (Agence France-Press), 2017

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