TOKYO: Japanese share prices fell 0.42 percent in the morning on Thursday, following a decline in US stocks on continuing tension in Libya and a further yen rise versus the dollar.
The benchmark Nikkei index of the Tokyo Stock Exchange dropped 44.55 points to 10,534.55 by the break and the Topix index of all first section shares declined 0.49 percent or 4.62 points to 942.26.
"Investors are watching when the steady rise of the yen against the dollar will halt," Okasan Securities Strategist Hideyuki Ishiguro told Dow Jones Newswires.
The dollar fetched 82.21 yen in Tokyo trade, down from 82.46 in New York late Wednesday. The euro eased to 113.21 yen, compared with 113.37 yen.
Kazuhiro Takahashi, general manager at Daiwa Securities Capital Markets, also said: "Investors will be cautious to see if the Nikkei falls below 10,500, which may signal the start of a bearish market."
He added that market participants will pay attention to whether other Asian markets decline as crude continues rising, which has accelerated inflation concerns in the region.
Moamer Kadhafi's regime has lost vast swaths of Libya's east to an insurrection and the West is braced for a mass exodus from a "bloodbath" in the oil-rich African state, disrupting production of its high-grade crude.
This has pushed oil prices above $100 per barrel in a return to highs not seen since 2008 and prompting fears that the global economic recovery could be stalled, to the dollar's detriment.
On Wall Street, airline shares were hammered for a second day over the prospect of higher fuel costs, while oil companies gained for the same reason.
The Dow Jones Industrial Average lost 0.88 percent after trading down nearly 150 points during the session.
In Tokyo, All Nippon Airways was 0.98 percent lower at 302 yen.
Honda Motor fell 0.85 percent at 3,495 yen.
Electronic measuring device maker Anritsu dropped 6.07 percent to 727 yen after NEC announced it will lower its stake in the company. NEC lost 0.84 percent to 235.
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