Tokyo stocks sank Monday morning, with the Nikkei index giving up early gains, after the Bank of Japan's quarterly business sentiment survey showed Japanese companies are cautious about the upcoming three-month period.

The 225-issue Nikkei Stock Average fell 604.22 points, or 1.50 percent, from Friday to 39,765.22. The broader Topix index was down 52.15 points, or 1.88 percent, at 2,716.47.

The U.S. dollar moved narrowly in the lower 151 yen zone in thin trading, with some overseas markets still closed due to holidays, dealers said.

At noon, the dollar fetched 151.32-33 yen compared with 151.33-43 yen in New York and 151.33-34 yen in Tokyo at 5 p.m. Friday.

The euro was quoted at $1.0786-0790 and 163.21-29 yen against $1.0785-0795 and 163.35-45 yen in New York and $1.0768-0769 and 162.96-163.00 yen in Tokyo late Friday afternoon.

After rising over 300 points in early trading, the Nikkei gradually pared gains before sinking over 600 points as investors digested the BOJ's Tankan business survey, released shortly before the start of trading.

The closely watched survey showed both manufacturers and nonmanufacturers are less optimistic for the upcoming three months, with their indexes worsening to 10 and 27, respectively. The results fell short of market expectations, according to brokers.

"The market was weighed on by eroded confidence in the future prospects of both the manufacturing and nonmanufacturing sectors," said Maki Sawada, a strategist in the Investment Content Department of Nomura Securities Co.

==Kyodo

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