TOKYO: Tokyo stocks lost 1.63 percent by noon Thursday following a plunge on Wall Street, as investors gave a thumbs down to the Federal Reserve's new measures to boost the flagging economy.
The benchmark Nikkei 225 index at the Tokyo Stock Exchange ended the morning session 142.84 points lower at 8,598.32.
The Topix index of all first-section issues lost 12.65 points or 1.67 percent to 744.48.
In a plan dubbed "Operation Twist," the Fed said after a two-day policy-setting meeting that it would shift $400 billion in its shorter-term debt portfolio holdings to longer-term bonds.
The move would not involve printing any more money, but supporters say it could lower rates and prod cash-rich banks to put their idle reserves to work.
In announcing the new measures, the Fed painted a grim picture of the economy, struggling with slow growth, high unemployment and a depressed housing market.
Investors were disappointed by the Fed announcement, said Yutaka Miura, a senior technical analyst at Mizuho Securities.
"The Fed's economic view is sharply deteriorating and there seems to be little it can do as a next step with Republicans calling on the Fed not to intervene," he told Dow Jones Newswires.
Okasan Securities strategist Hideyuki Ishiguro said the market focus will soon shift to the eurozone debt crisis.
"Markets, the US in particular, had already priced in the Fed's move in advance so the negative reaction was anticipated," Ishiguro told Dow Jones Newswires.
"With the FOMC meeting over, the situation in Europe will once again dominate market attention."
The euro fetched $1.3578 in Asian trade, up from $1.3566 in New York on Wednesday. Against the Japanese currency the common European unit firmed to 104.22 yen from 103.74 yen.
The dollar edged up to 76.77 yen from 76.48 yen.
Honda Motor lost 4.05 percent at 2,271 yen, with Sony off 1.91 percent at 1,482.
Softbank fell 10.56 percent at 2,327 while its rival KDDI gained 1.27 percent at 637,000 on a report by a Nikkei business daily on its web site that KDDI will start selling Apple's iPhone5 from around November.
Copyright AFP (Agence France-Presse), 2011
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