Stock, Bond Prices Skid in Tokyo as Yen’s Value Dives

The Tokyo Stock Exchange’s key index plunged this morning as the yen’s decline against the U.S. dollar disheartened stock and bond markets.

“This is a triple-low situation . . . with declines in all the markets--stock, foreign exchange and bonds,” said Masayoshi Yano, a dealer with Nikko Securities Co.

The 225-share Nikkei stock index lost 572.73 points, or 1.69%, ending the morning session at 33,218.35. It lost 54.12 points Tuesday. Volume was thin with 250 million shares changing hands in the first session.

The dollar closed the morning session at 150.75 yen, up 1.25 yen from Tuesday’s close. It opened at 150.25 yen, up 0.75 yen from the previous day’s close at 149.50 yen, and rose further while ranging between 150.25 yen and 150.98 yen.

Discouraged by the yen’s weakness, the price of the benchmark 10-year No. 119 Japanese government bond fell 0.29 points to 86.79 from Tuesday’s close at 87.08. Its yield rose from the previous day’s 7.115% to 7.175%.

Yano said the yen’s decline, as well as renewed speculation over a rise in the nation’s discount rate, discouraged many investors.

Japan’s leading economic newspaper, Nihon Keizai Shimbun, said the Bank of Japan will raise its official discount rate from the current 4.25% by as much as one percentage point as early as next week.

Market players have expected the central bank to raise its key lending rate since shortly after the nation’s general election last month. Analysts have blamed uncertainties and speculations involving the rate for recent plunges in the stock market.

The dollar surpassed the 150-yen line in Sydney, Australia, before the Tokyo market opened.

The dollar’s surge halted when it neared 151 yen as the Bank of Japan was seen intervening in the market. Traders said the bank sold about $1 billion in the morning session in an effort to halt the dollar’s further rise. The bank does not officially comment on its market interventions.