Nikkei falls as yen jumps on weak US data, exporters hit
* Dollar/yen hurt by Sankei report saying BOJ policymakers divided ahead of meeting
* No positive catalysts for Nikkei seen from U.S., Japan monetary policy - analyst
By Ayai Tomisawa
TOKYO, Sept 7 (Reuters) - Japanese stocks dropped on Wednesday morning after exporters and other cyclical shares were hit by a rising yen as weak U.S. service sector activity dashed expectations for a near-term interest rate increase from the U.S. Federal Reserve.
The Nikkei fell 0.8 percent to 16,954.46 in midmorning trade, retreating from a three-month high hit earlier this week.
The dollar declined 0.5 percent to 101.50 yen after slipping to a low of 101.245 earlier, its weakest since Aug. 26.
The dollar-selling was triggered after the Institute for Supply Management's index of non-manufacturing activity fell to 51.4, its lowest level since February 2010, virtually shutting the door on the Fed raising rates as early as this month.
Also souring sentiment was a report in the Sankei newspaper saying Bank of Japan policymakers were divided ahead of the central bank's Sept. 20-21 meeting, at which BOJ Governor Haruhiko Kuroda has said the board will conduct a comprehensive assessment of its massive stimulus programme. Continuación...