TOKYO, Feb. 6 (Xinhua) -- Tokyo stocks closed sharply lower Tuesday with the benchmark Nikkei stock index plunging 4.73 percent in rampant selling after the Dow Jones Industrial Average logged its biggest-ever daily point loss and U.S. 10-year Treasury yields spiked overnight.
The 225-issue Nikkei Stock Average dropped 1,071.84 points, or 4.73 percent, from Monday to close the day at 21,610.24.
The broader Topix index of all First Section issues on the Tokyo Stock Exchange, meanwhile, lost 80.33 points, or 4.40 percent, to finish at 1,743.41.
Tokyo stocks retreated from the morning and extended losses throughout the day as investors offloaded issues following the Dow's record daily point loss and on concerns of a continued drop in U.S. equities and stock futures, market strategists here said.
"Selling accelerated as Dow futures extended declines during Tokyo trading hours and concerns grew that U.S. equities will continue to fall tonight," Makoto Sengoku, a market analyst at the Tokai Tokyo Research Institute, was quoted as saying.
Market players dumped a broad range of Japanese issues following another sharp rise in U.S. bond yields on the back of solid U.S. jobs data and economic expansion, analysts added.
Concerns were reignited that higher inflation in the U.S. will lead to a hike in interest rates which would harm markets reliant on the central bank's stimulus measures. This triggered a sell-off on Wall Street and sparked a global rout.
"Since last autumn, investors had been betting on the 'Goldilocks economy' -- solid economic expansion, improving corporate earnings and stable inflation," Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities, said.
"But the tide seems to have changed," he added.
Other local analysts maintained that the market here was due a correction as prices have peaked to new records recently and the likelihood of the Bank of Japan holding fire on tapering its easing measures meant that the adjustment would run its course in the short-term.
"I think the sell-off was a not-bad position adjustment as prospects grew that the Bank of Japan will persistently carry out its monetary easing policies to support the market," Sengoku said.
Other analysts concurred, stating that providing Japan's economic growth stays on track and domestic corporate earnings continue to be solid, the market's downturn would self-correct.
"The recent nosedive is not expected to last long as economic growth and domestic earnings remain solid," Maki Sawada, vice president of the investment research and investor services department at Nomura Securities Co., was quoted as saying.
All industry categories on the main section retreated, with metal product, nonferrous metal, and rubber product-linked issues comprising those that declined the most by the close of play.
Large-capped issues tanked Tuesday, with Mitsubishi UFJ Financial Group dropping 3.7 percent to 790.60 yen and owner and operator of Uniqlo, Fast Retailing, lost 5.5 percent to close at 44,000 yen.
With the "safe haven" yen appreciating against the U.S. dollar, exporters lost ground, with Hino Motors falling 5.7 percent, to 1,433 yen, while Toyota Motor dropped 2.9 percent to finish the day at 7,286 yen.
On the main section on Tuesday, 3,155.71 million shares changed hands, surging from Monday's volume of 1,881.89 million shares and falling issues trounced rising ones by 2,027 to 35 on the First Section, while three ended the day unchanged.
The turnover on the second trading day of the week came to 5,648.3 billion yen (51.79 billion U.S. dollars).