Japan stocks slide on U.S. bond yields, leading to sell-off

TOKYO, Jan 18 Reuters -- Japanese shares reversed course to trade lower on Tuesday, as a jump in U.S. bond yields made investors cautious, prompting a sell-off in market heavyweights.

The Nikkei share average was down by 0.6% to 28,158 by 0448 GMT, after rising as much as 0.9% earlier in the session. The broader Topix lost 0.78% to 1,971. Sentiment was weakened by rising U.S. Treasury yields. After its policy meeting, investors thought the U.S. market would fall this evening, said Shoichi Arisawa, general manager of the investment research department at IwaiCosmo Securities.

The short end to new epidemic highs was lifted by the U.S. Treasury yields during Asian trading hours, as traders braced for the possibility of a surprise from the Federal Reserve.

The yields of benchmark 10 years rose more than 6 basis points to 1.8550% and the Fed funds futures fell as markets baked in a hike in March and three more by the end of the year.

Uniqlo clothing store owner Fast Retailing cut its gains while chip-making equipment maker Tokyo Electron reversed its course to lose 0.21%. The tech start-up investor SoftBank Group gave up its gains by 0.22%.