Nikkei slides on US tech selloff, oil-driven rate fears

TOKYO: Japan's Nikkei share average tumbled on Monday as a selloff in US technology stocks and rising oil prices fuelled concerns about inflation and higher interest rates.

The benchmark Nikkei 225 fell 2.05 per cent to 63,984.45 in early trading. The broader Topix slipped 1.22 per cent to 4,016.34.

The decline in Japanese equities followed a weak session on Wall Street on Friday, weighed down by losses in artificial intelligence- and chip-related stocks.

A more than three per cent jump in oil prices also added to inflationary concerns, which have been a key driver of market volatility amid expectations of further monetary tightening by central banks.

Bank of Japan Governor Kazuo Ueda said on Monday that underlying inflation is "quite close" to the central bank's two per cent target, heightening the importance of anchoring inflation around that level.

"While chip-related stocks drag the index down, buying of value and defensive stocks should underpin the market," Yuta Okamoto, market analyst at Tokai Tokyo Intelligence Laboratory, wrote in a note.

There were 78 advancers in the Nikkei 225 against 147 decliners, with no stocks unchanged.

The largest losers were Taiyo Yuden, down 7.42 per cent, followed by Sumitomo Electric Ind., 5.96 per cent lower, and Sumco, which lost 5.88 per cent.

The largest percentage gainers in the index were Toho , up 3.64 per cent, followed by Baycurrent, 2.80 per cent higher, and Aeon, which gained 2.14 per cent.