Nikkei drops as hawkish Fed bets unsettle investors

TOKYO, Nov 24 (Reuters) - Japan's Nikkei ended lower on Wednesday, as growth-oriented stocks took a beating amid investor concerns that the U.S. Federal Reserve might speed up policy tightening to cope with broadening inflationary risks.

U.S. President Joe Biden on Monday nominated Federal Reserve Chair Jerome Powell for a second four-year term and appointed Lael Brainard as vice-chair, leaving investors bracing for a more aggressive central bank. read more

"It's not that markets are reacting to these nominations per se. What's becoming clear is, for Powell, in his second term, the biggest task is dealing with inflation, rather than maximising employment," said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

Register now for FREE unlimited access to Reuters.com

Richly valued U.S. tech shares fell in the past two sessions, denting investors' risk appetite in the Japanese markets, which were closed on Tuesday for a national holiday.

The Nikkei average (.N225) dropped 1.58% to 29,302.66, while the broader Topix (.TOPX) lost 1.16% to 2,019.12, led by a 1.85% fall in Topix Growth index (.TOPXG).

Internet firm Z Holdings (4689.T), which has a price/earning ratio of more than 60 times, fell 4.6%, while medical platform operator M3 (2413.T) lost 5%.

Recruit Holdings (6098.T) shed 4.3%, while SoftBank Group (9984.T), which has a big exposure to global high-tech shares, dropped 3.3%.

Semiconductor-related shares were also pounded, with Lasertec (6920.T) down 3.3%, Advantest (6857.T) losing 4.1% and Screen Holdings (7735.T) shedding 3.1%.

On the other hand, some value stocks gained, with a weaker yen lifting carmakers while elevated U.S. bond yields boosted banks.

Mitsubishi Motors (7211.T) rose 5.1%, while Nissan Motor (7201.T) gained 4.4%. Toyota Motor (7203.T) added 0.9%.

Among financials, SMFG (8316.T) rose 2.1%, while Mitsubishi UFJ (8306.T) gained 0.8%.

Resource-related firms also gained, helped by a rebound in oil prices.

Trading house Marubeni (8002.T) jumped 1.9% while rival Mitsui & Co (8031.T) added 1.7%. Sumitomo Metal (5713.T) gained 1.8%.

Elsewhere, Toshiba (6502.T) fell 1.6% following a Reuters report that its second-largest shareholder objected to the Japanese conglomerate's plan to split itself into three companies. read more

Register now for FREE unlimited access to Reuters.com
Reporting by Hideyuki Sano; Editing by Rashmi Aich and Sherry Jacob-Phillips

Our Standards: The Thomson Reuters Trust Principles.