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.
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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.