Kazuhiro Miyake, strategist at Nikko Research Center, said: "Rising long- term interest rates [implied by rising long-term bond yields] are more than Japan's ailing economy can accept. Domestic corporate earnings may deteriorate further if high interest rates continue." There were fears that the stronger yen may harm growth.
TOKYO SHARES extended early losses to close down 115.35 points - 0.8 per cent - at 14,349.83. Investors were shaken by the sharp rise in government bond yields, at their highest level since July 1997.