Tokyo stocks ended lower Thursday, as a wide range of issues were sold amid caution ahead of the conclusion of the Bank of Japan's two-day policy meeting the following day.

The 225-issue Nikkei Stock Average ended down 156.24 points, or 0.40 percent, from Wednesday at 38,720.47. The broader Topix index finished 24.66 points, or 0.89 percent, lower at 2,731.78.

On the top-tier Prime Market, decliners were led by electric power and gas, insurance, and iron and steel shares.

The U.S. dollar plunged to the upper 155 yen zone in New York overnight as U.S. data showing decelerating inflation in May reinforced bets that the Federal Reserve is on track to cut interest rates this year.

But the dollar quickly bounced back, recovering to the lower 157 yen range in Tokyo, after the Fed later indicated that the pace of rate cuts would be slower than previously expected.

Stocks started the day higher, with semiconductor and technology stocks leading the way following the record-high close of the U.S. Nasdaq index overnight.

But the market soon lost momentum, overshadowed by wariness over the BOJ meeting at which the central bank is widely expected to discuss further reducing its government bond purchases, analysts said.

"(Such a decision) may put upward pressure on long-term interest rates, causing investors to hold back until the BOJ's moves are clear," said Toshikazu Horiuchi, equity strategist at IwaiCosmo Securities Co.

Higher bond yields raise borrowing costs for companies and weaken the relative attractiveness of equities.

Investors were also reluctant to buy as it was unclear whether the Fed's meeting outcome had been completely factored into the U.S. stock market after the central bank projected only one interest rate cut may take place this year despite cooling inflation, analysts said.

"The U.S. market had only about two hours of trading after the Fed meeting concluded. There could be a different reaction tonight, and investors might be waiting to see how that unfolds," said Horiuchi.

==Kyodo

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