TOKYO, March 11 (Reuters) -
Japanese shares ended sharply lower on Monday as chip-related stocks tracked their U.S. peers lower and the yen's strength hurt appetite for exporters.
The Nikkei fell 2.19% to close at 38,820.49, its biggest fall since Oct. 4.
"U.S. chip stocks fell at the end of last week, which helped the Nikkei enter a correction phase," said Shuji Hosoi, senior strategist, Daiwa Securities.
The S&P 500 and Nasdaq closed lower on Friday, after touching record highs during the session, with high-flying chip stocks reversing course.
The Philadelphia Semiconductor index lost 4% on Friday, with Nvidia becoming the biggest drag.
"Japanese equities were also hurt by the stronger yen. This trend will probably continue until the Bank of Japan (BOJ) concludes its policy meeting last week."
A growing number of BOJ policymakers are warming up to the idea of ending negative interest rates this month on expectations of hefty pay hikes this year.
The yen strengthened against the dollar on speculation about the BOJ's policy tweak.
Chip-equipment maker Tokyo Electron lost 3.15% and chip-testing equipment maker Advantest fell 4.78%.
The broader Topix fell as much as 3%, before ending the session down 2.2% at 2,666.83.
The BOJ typically buys Topix-linked exchange-traded funds when the index falls more than 2% as part of its stimulus package.
"The Topix loss in the afternoon made us think that the BOJ might not have stepped in the market," said Takehiko Masuzawa, trading head at Phillip Securities Japan.
"If that was the case, the BOJ is trying to do what it will be doing after it changes its ultra-loose policy."
Whether the BOJ intervened in the market will be announced around 0830 GMT.
The banking index, which is typically strong amid rising yields, lost 3.84%.
Toyota Motor fell 3.1%, becoming the biggest drag for the Topix.
(Reporting by Junko Fujita; Editing by Rashmi Aich and Sohini Goswami)
