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Nikkei sparks Asian sell-off
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June 30, 1999: 4:53 a.m. ET
BoJ inspires 250 point slump in Tokyo, U.S. rate jitters knock other markets
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LONDON (CNNfn) - Tokyo led a sell-off across most of Asia, after an unguarded comment by the governor of the Bank of Japan sent the Nikkei stock index spiraling downward as concerns about a tightening monetary stance sparked a sell-off in government bonds.
The Nikkei 225 slumped 253.05 points to end at 17,529.74, a fall of 1.42 percent. The stock market, which had been heading higher in morning trade, suddenly reversed after Masaru Hayami, the head of the central bank, unnerved traders with hints to parliament that he is considering a change to his ultra-liberal monetary policy.
Hayami told politicians that as the economy had clearly bottomed out the present zero interest rate policy could not continue. The resulting rise in long-term government bond yields raised worries that higher rates could undermine the nascent economic recovery.
Domestic concerns meant Japanese investors shrugged off the rally on Wall Street overnight. The Dow Jones industrial average closed up 160.20 points, or 1.5 percent, at 10,815.35. The Nasdaq composite gained 39.67 points, or more than 1.5 percent, to end the day at 2,642.11 and the S&P 500 index rose 20.10, or 1.5 percent, to 1,351.45.
Most other markets shrugged off the strength of U.S. stocks and instead took their cue from the fall on Tokyo combined with wariness ahead of the U.S. interest rate decision due later Wednesday.
In Hong Kong, the Hang Seng index slumped in a late futures-inspired sell-off to close 1.7 percent lower, a fall of 233.35 points to end at 13,532.14.
Singapore blue chips also suffered late selling pressures with the Straits Times index closing down 0.61 percent at 2,167.70.
The All Ordinaries index in Sydney fell 0.75 percent to end down 22 points at 2,968.9, as interest rate jitters were compounded by corporate book balancing on the last day of the Australian financial year.
South Korea's Kospi suffered more than other markets to close down 1.61 percent at 883.00. Domestic issues player their part as economists expressed concerns about the speed at which the economy was recovering. This raised the prospect of rising inflation, after data showed the price increases had hit a 34-year low.
Earlier, Taiwan's Weighted index fell 0.55 percent to end at 8,467.37, while Philippine blue chips closed just in the black, up 0.1 percent at 2,486.96.
Kuala Lumpur's Composite index slumped 2.24 percent to close at 811.10. Jakarta's blue chips also suffered heavy losses in late trade as the JSX index ended down 2.72 percent at 662.03. Bangkok's Set index shed some of its earlier gains to close up 0.8 percent at 521.77. 
-- from staff and wire reports
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