The Nikkei ended the morning session down 0.4% at 27,491.51, weakening into the break after spending the early part of the session with gains of as much as 0.43%. The broader Topix slipped 0.24% to 1,988.30, after earlier rising to 1,999.66, the highest level since Dec. 1. The volatile Japanese session followed a mixed day for Wall Street, with the Dow dropping about 0.5%, the tech-heavy Nasdaq up 0.7% and the S&P 500 about flat. U.S. equity futures , though, pointed to a 0.5% decline at the restart. U.S. consumer prices rose at a slower pace in January, but faster than economists had forecast. Both Philadelphia Fed President Patrick Harker and New York Fed President John Williams said overnight that the Fed still has work to do to combat inflation. U.S. Treasury yields jumped, with the 10-year yield scaling 3.799% for the first time since the start of the year. "Whether the 10-year Treasury yield keeps to a range, whether it falls back or whether it takes another step higher, that will probably be a major differentiator for the direction of equities," said Kazuo Kamitani, a Nomura strategist.
A stronger yen was also weighing on Japanese stocks, Kamitani said, with the currency last up 0.2% at 132.82 per dollar and 0.3% stronger at 142.45 per euro . Of the Nikkei's 225 components, 109 rose versus 108 that fell, with eight flat. Among the index's sub-sectors, financials rose the most, adding 1.3% as higher long-term bond yields boosted their revenue outlook. Real estate led laggards, sliding 0.9%. (Reporting by Kevin Buckland; editing by Uttaresh.V)
