TOKYO, Sept. 2 (Xinhua) -- Tokyo stocks closed lower Friday amid ongoing concerns over the U.S. Federal Reserve's aggressive rate hikes to tame inflation, with the yen falling to a fresh 24-year low against the U.S. dollar, which stoked fears about Japan's already negative trade balance.

The 225-issue Nikkei Stock Average shed 10.63 points, or 0.04 percent, from Thursday to close at 27,650.84.

The broader Topix index, meanwhile, lost 5.32 points, or 0.27 percent, to finish at 1,930.17.

Local brokers said that expectations are growing for further rate hikes from the Fed, following hawkish remarks from its chairman Jerome Powell last week and other high-ranking central bank officials since.

"Many people in the equity markets, including Japan, now think that the upside is very limited, because of that hawkish stance of the Federal Reserve," Masayuki Kichikawa, chief macro strategist at Sumitomo Mitsui Asset Management in Tokyo, was quoted as saying.

Strategists here added that market sentiment remained circumspect, especially ahead of the release later in the day of key U.S. job data, that if solid, will raise the prospect of another steep 75 basis points rate hike at the Fed's policy-setting meeting later this month.

The Fed's stance, in contrast to the Bank of Japan's dovish position on monetary policy, with its key interest rate remaining in negative territory, has led to a gulf in interest rates between the United States and Japan, and catalyzed dollar buying as the yen gets dumped, they said.

The yen tumbled to a fresh 24-year low against the U.S. dollar in the lower 140 yen range in Tokyo on Friday, leading to Japan's Finance Minister Shunichi Suzuki warning the government here is watching currency moves "with a heightened sense of vigilance."

He said that the Japanese government will take "appropriate action" if needed by closely communicating with monetary authorities in other nations.

The Japanese government again reiterated on Friday that the rapid decline of the yen could hurt both the economy and the stability of financial markets, with top government spokesperson Chief Cabinet Secretary Hirokazu Matsuno doubling down on remarks made a day earlier saying, "Rapid fluctuations are undesirable."

Market analysts explained that a weak yen, on the one hand, is a boon for Japan's export-led economy, as profits from exporters made overseas get a boost when repatriated on favorable exchange rates and price competitiveness is enhanced in foreign markets when the yen is weaker compared to its major counterparts.

On the other hand, they said, a weak yen further inflates prices for energy and raw material products, essential for resource-poor Japan to continually import, which weighs heavily on the country's trade balance sheet.

"Of course, a weakened yen has been helping the profits of the exporting companies," Kichikawa said, adding, "But it's not clear whether the yen weakness is positive for the economy and equity pricing in Japan because at the moment, Japan's trade balance is in the negative territory."

By the close of play, oil and coal product, air transportation, and iron and steel issues comprised those that declined the most on the Prime Market, and falling issues outpaced rising ones by 1,096 to 650, while 91 ended the day unchanged.

Energy-oriented issues came under pressure, with oil exploration giant Inpex sinking 0.8 percent, while refiner Eneos Holdings slipped 0.5 percent.

Technology shares were sold on concerns over the Fed's rate hikes and the downside effects that lie ahead for the U.S. economy, with Trend Micro losing 1.7 percent, while gaming firm Nexon weighed heavily on the Nikkei, dropping 3.1 percent by the close.

Bucking the downward trend, retailers gained on data for August showing solid sales at department stores.

As such, department store operators J. Front Retailing and Isetan Mitsukoshi Holdings added 2.1 and 2.0 percent, respectively.

On the Prime Market on Friday, 1,030.61 million shares changed hands, dropping from Thursday's volume of 1,100.42 million shares.

The turnover on the final trading day of the week came to 2,477.43 billion yen (17.65 billion U.S. dollars). ■