Tokyo's Nikkei stock index drops 3% on yen rally

Tokyo - Tokyo's benchmark stock index plunged more than 3% on Thursday afternoon as the soaring yen hammered exporters after the Bank of Japan decided against boosting its stimulus.

The Nikkei 225 tumbled 3.10%, or 493.21 points, to 15 426.27 in late afternoon trading.

Earlier on Thursday, the yen surged to a 21-month high against the dollar in the wake of the BoJ's decision to leave its massive ¥80trn asset-buying plan unchanged, as fears over Britain's future in the EU pummel financial markets.

Investors tend to buy the yen as a safe asset in times of turmoil, but the stronger currency is bad for Japanese stocks as it threatens the profitability of the country's exporting giants.

The yen climbed as high as 104.11 against the dollar, its strongest level since September 2014, in afternoon deals.

The BoJ's decision comes after the Federal Reserve on Wednesday decided against raising interest rates and its boss Janet Yellen sounded a warning over a possible British exit - or Brexit - from the EU.

World markets have been in turmoil over the past week on worries about the global economic outlook and, in recent days, a growing sense that the June 23 referendum will see Britons vote to break away from the European Union.