Japan's Nikkei pulls back from record high on rate-hike fears, stronger yen

By Junko Fujita

TOKYO, Aug 14 (Reuters) - Japan's Nikkei share average fell on Thursday, pulling back from a record high scaled in the previous session on concerns over a potential shift in Bank of Japan policy and a stronger yen.

The Nikkei .N225 ended 1.45% lower at 42,649.26, snapping a six-session rally. The index crossed the key 43,000 level on Wednesday for the first time.

Investors sold stocks to lock in profits on growing concerns that the market is overheating, said Shuutarou Yasuda, a market analyst at Tokai Tokyo Intelligence Laboratory.

The market also became cautious that the BOJ may raise interest rates soon, after U.S. Treasury Secretary Scott Bessent's comments, he said.

In an interview with Bloomberg Television, Bessent said the BOJ is going to hike rates as it is "behind the curve" in handling monetary policy.

The comments came as rising bets that the Federal Reserve will resume rate cuts next month sent the dollar to a three-week low. FRX/

A stronger yen typically weighs on exporter shares by reducing the value of overseas earnings when converted back into Japanese currency.

The broader Topix .TOPX fell 1.1% to 3,057.95, also snapping a six-session winning streak.

Shares of chip-testing equipment maker Advantest 6857.T lost 4.64% to become the biggest drag for the Nikkei. Chip-making equipment maker Tokyo Electron 8035.T fell 2.01%.

Heavy machinery maker Mitsubishi Heavy Industries 7011.T slipped 5.69%, weighing the most on the Topix.

Automakers fell, with Toyota Motor 7203.T and Honda Motor 7267.T losing 2.43% and 1.25%, respectively.

Among gainers, technology investor SoftBank Group 9984.T rose 4.4%.

Of the more than 1,600 stocks trading on the Tokyo Stock Exchange's prime market, 28% rose, 68% fell, and 3% closed flat.