Tokyo stocks were slightly lower Thursday morning, as a firmer yen prompted selling of exporter issues and a cautious mood prevailed ahead of the results of the Bank of Japan's policy meeting.

The 225-issue Nikkei Stock Average fell 45.35 points, or 0.12 percent, from Wednesday to 38,831.36. The broader Topix index was down 17.71 points, or 0.64 percent, at 2,738.73.

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 around the 157 yen line in Tokyo, after the Fed later indicated that the pace of rate cuts would be slower than previously expected.

At noon, the dollar fetched 156.99-157.01 yen compared with 156.65-75 yen in New York and 157.26-28 yen in Tokyo at 5 p.m. Wednesday.

The euro was quoted at $1.0806-0810 and 169.64-73 yen against $1.0803-0813 and 169.34-44 yen in New York, and $1.0744-0746 and 168.97-169.01 yen in Tokyo late Wednesday afternoon.

Stocks were initially supported by the record-high close of the U.S. Nasdaq index overnight, but the market soon lost steam as exporter issues were hurt by the yen's firmness, which would erode overseas earnings when repatriated, brokers said.

Investors also refrained from buying ahead of the outcome of the BOJ's two-day monetary policy meeting through Friday, as they awaited the central bank's decision on further reducing its government bond purchases, said Maki Sawada, a strategist in the Investment Content Department of Nomura Securities Co.

==Kyodo

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