TOKYO (AP) _ Stock prices closed lower Thursday as major Japanese companies and banks hit by the market's recent downturn sold shares to avoid potentially bigger losses. The dollar was higher against the yen.

The benchmark 225-issue Nikkei Stock Average dropped 231.58 points, or 1.72 percent, to close at 13,201.07 on the Tokyo Stock Exchange. On Wednesday, the average fell 177.86 points, or 1.3 percent.

The dollar bought 116.72 yen on the Tokyo foreign exchange market at 3 p.m. (1 a.m. EST) Thursday, up 0.20 yen from late Wednesday, and above 116.46 yen late in New York on Wednesday.

On the stock market, the Nikkei slumped, led by a drop in shares of electronics maker Matsushita and other major technology companies. Traders said banks and companies among the biggest stock owners are selling their holdings to make up for losses caused by the market's slide.

Worries that a slowing economy will crimp Japanese corporate profits were also weighing on stock prices, they said.

The broader Tokyo Stock Price Index of all issues listed on the first section fell 23.99 points, or 1.9 percent, to close at 1,230.10. The TOPIX lost 17.28 points, or 1.36 percent, on Wednesday.

In New York on Wednesday, the Nasdaq composite index rose 82.88 to 2,524.18, and the Dow Jones industrial average climbed 31.72 to 10,604.27.

In currency dealings, the dollar edged higher against the yen, but remained shy of the 17-month high it reached on Wednesday.

In Tokyo trading on Wednesday, the greenback spiked to 117.19 yen, rising above 117 yen in Tokyo for the first time since July 27, 1999, when it hit 117.40 yen.

The dollar has been buoyed by investor fears that Japan's sluggish consumer spending and tumbling stock market may put the brakes on the country's economic recovery.

In other currencies, the euro was traded at 109.80 yen, up from 109.58 yen late Wednesday in Tokyo.

The yield on the benchmark 10-year Japanese government bond was at 1.560 percent, down from 1.610 percent late Tuesday. Its price was at 100.35, up 0.44 point.

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