Tokyo Stocks Fall Again; Yen Hits 3-Year Low : Securities: Market investors and currency traders had apparently already discounted the effects of a long-anticipated hike in the central bank’s key discount rate.

Share prices on the Tokyo Stock Exchange continued sliding Tuesday, and the yen weakened further against the dollar despite the long-anticipated announcement earlier in the day of a hike of 1 percentage point in the central bank’s discount rate.

The Nikkei index came within range of the psychologically important 30,000-point level and ended the day down 456.05 points at 30,807.19, its lowest close since the beginning of last year. The Japanese currency closed at 153.65 yen to the dollar, the weakest exchange rate in three years.

It appeared that stock market investors and currency traders had already discounted the effects of the increase in the rate to 5.25%, which Yasushi Mieno, governor of the Bank of Japan, described as a “preemptive” adjustment aimed at controlling latent inflationary pressures.

Ordinarily, a higher discount rate would be expected to strengthen the currency, but dealers continued buying dollars Tuesday, boosting the value of the greenback by 0.10 yen from Monday’s close.

Tokyo’s financial markets were scheduled to remain closed today because of a national holiday.

Bearishness has prevailed in the Tokyo stock market since the beginning of the year, partly because of a poor performance in the Japanese government bond market, which was in turn attributed to a widening gap between the yields of money market funds and bonds. The Nikkei average, an index of 225 issues, has shed more than 8,100 points so far this year--a plunge of nearly 21%.

Some observers have characterized Japanese stocks as overvalued and badly needing a technical correction. Indeed, the average price-earnings ratio in the First Section of the Tokyo Stock Exchange remains above 48, two to four times typical levels on U.S. and European exchanges.

The weakening of the Japanese currency apparently has replaced deteriorating bond prices as the primary theme behind the skittishness in the stock market. Massive intervention by the central bank has failed to prop up the yen, eroding investor confidence.

Although uncertainty about a pending discount rate increase has caused much volatility in Tokyo’s financial markets, Tuesday’s rate hike was widely dismissed as ineffective in rescuing the yen, which has lost nearly 6% of its value against the dollar since Jan. 1. Bank of Japan’s Mieno, however, told a news conference that the aim of the full-point rate hike was to head off inflation by tightening credit.

“The Bank of Japan expects that this decision will contribute preemptively to maintaining price stability,” Mieno said. “The bank hopes that this measure will also contribute to sustainable growth led by domestic demand while maintaining market stability.”

Business leaders expressed mild support for the central bank’s action, but there was some speculation that higher lending rates might dampen economic growth.

The Nihon Keizai newspaper cited a study based on information from its data bank, Needs-Economy, in predicting that the rate hike would shave as much as 0.4 percentage points off real economic growth in the fiscal year that begins April 1. GNP growth for the year will have to be revised downward to 3.8% from 4.2%, Nihon Keizai said.