TOKYO: Japanese stocks fell on Tuesday tracking Wall Street's weak finish overnight, as investors were cautious that the US Federal Reserve could raise interest rates as soon as March, while higher US Treasury yields drove a sell-off in technology shares.

The Nikkei share average fell 0.87% to 28,231.31 by midday close, after falling as much as 1.37%. The broader Topix lost 0.72% to 1,981.22.

"The Japanese market was dragged down by Wall Street's weak finish for two consecutive sessions and investor sentiment was cautious regarding US monetary policy outlook," Shoichi Arisawa, general manager of the investment research department at IwaiCosmo Securities, said.

US stocks fell overnight, as bets that the Fed could raise interest rates as soon as March led investors to pare risky assets and lifted the 10-year Treasury yield to a two-year high.

"It is hard to make active bets ahead of the CPI data to be released in the US," Arisawa added.

US December consumer inflation data is due to be released on Wednesday, with headline CPI seen coming in at a red-hot 7% on a year-on-year basis, boosting the case for an early increase in interest rates.

Technology shares dragged the Nikkei lower, with chip-making equipment maker Tokyo Electron losing 1.77%, global technology start-up investor SoftBank Group falling 2.51% and sensor maker Keyence down 6.34%.

Nippon Paint Holdings tumbled 13.4% after the maker of coating materials said its shareholders planned to sell its shares in a public market.

As investors continued to shift their money to larger companies amid rising rates in the US, high-end Japanese toaster maker Balmuda Inc, which listed about two years ago, fell 4.41% after suspending sales of mobile phones that it unveiled in November.

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