Tokyo stocks fell Monday, the first day of the new fiscal year, as investors sold a wide range of shares to lock in gains and the Bank of Japan's quarterly business sentiment survey showed Japanese companies turning cautious about the upcoming three-month period.

The 225-issue Nikkei Stock Average ended down 566.35 points, or 1.40 percent, from Friday at 39,803.09, its lowest close since March 18. The broader Topix index finished 47.40 points, or 1.71 percent, lower at 2,721.22.

On the top-tier Prime Market, decliners were led by oil and coal product, securities house and transportation equipment issues.

The U.S. dollar hovered in the lower 151 yen zone, with some overseas markets still closed for holidays. Traders awaited U.S. economic data due out later this week, including the March employment report, to gauge the potential timing of interest rate cuts by the U.S. Federal Reserve, dealers said.

Despite an initial advance of over 300 points in early trading, the Nikkei sharply reversed course, dipping over 600 points at one point and dropping below the 40,000 threshold.

"It's typical for investors to sell stocks to secure profits on the first day of the new fiscal year," said Toshikazu Horiuchi, an equity strategist at IwaiCosmo Securities Co.

"Sectors that have surged recently, such as chip manufacturers and automakers, were particularly targeted for profit-taking," he added.

The BOJ's Tankan business survey, released shortly before the start of trading, served as an additional cue for selling for some investors.

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

==Kyodo

© Kyodo News International, Inc., source Newswire