Japan's Nikkei slides, banks rally on reports BOJ mulling rate hike
Nikkei share average fell nearly 1% on Wednesday, while bank stocks rallied following local media reports that the Bank of Japan was mulling an imminent interest rate hike.
The Nikkei was down 0.9% at 38,186.48, as of 0055 GMT, while the broader Topix lost 0.5%.
The Tokyo Stock Exchange's banking index, however, climbed nearly 2% to be the top performer among the 33 industry groupings. Higher rates would improve lending margins and potentially boost investment income for banks.
The Bank of Japan is considering raising the key rate to around 0.25% from near zero currently at its policy meeting that ends later in the day, media including national broadcaster NHK and the Nikkei newspaper reported overnight.
That sent the yen soaring about 0.8% against the dollar on Tuesday, reducing the value of overseas sales at Japan's many exporters.
BOJ policy announcements do not have a fixed time, but generally come some time between 0230 GMT and 0500 GMT.
«If there actually is a rate hike today, the yen should strengthen further and the Nikkei should fall further,» said Maki Sawada, an equity strategist at Nomura Securities.
«Hints about the pace of additional rate hikes will also be key.»
Speculation had already risen that the central bank might raise rates again at the current meeting after several high-profile Japanese politicians — including the prime minister — urged a near-term normalisation of monetary policy.
The BOJ's last rate increase, in March, was its first since 2007.
Resona Holdings was the Nikkei's best
