TOKYO (Kyodo) -- Tokyo stocks fell Thursday morning as sentiment was dampened by steep losses on Wall Street overnight after the Federal Reserve indicated there may be fewer interest rate cuts than expected next year amid rising inflation risks.

The 225-issue Nikkei Stock Average dropped 373.33 points, or 0.96 percent, from Wednesday to 38,708.38. The broader Topix index was down 13.34 points, or 0.49 percent, at 2,706.53.

The U.S. dollar topped the 155 yen line as the yen was sold after the Bank of Japan decided to forgo raising interest rates at its policy meeting. The dollar was also sought on higher U.S. Treasury yields following the Fed's policy meeting.

At noon, the dollar fetched 155.09-11 yen compared with 154.77-87 yen in New York and 153.57-59 yen in Tokyo at 5 p.m. Wednesday.

The euro was quoted at $1.0388-0392 and 161.11-19 yen against $1.0346-0356 and 160.27-37 yen in New York and $1.0496-0498 and 161.19-23 yen in Tokyo late Wednesday afternoon.

Stocks opened sharply lower and stayed in negative territory, weighed down by the selling of heavyweight tech shares after the Nasdaq index plunged and the Dow Jones Industrial Average closed down for the 10th straight trading day.

Meanwhile, investors took a wait-and-see approach before the BOJ's policy decision and remarks from Governor Kazuo Ueda on the interest rate outlook later in the day, brokers said.