Tokyo stocks fell moderately on Thursday amid worries about the strength of the country's banks.

The key Nikkei index lost 72.72 points, to close at 13,706.73.

The dollar bought 116.28 yen in mid-afternoon trading, down 0.80 yen from its level of 117.08 late in Tokyo on Tuesday but above 115.96 yen late in New York on Wednesday.

Tokyo markets were closed Wednesday for a national holiday.

Investors sold bank shares amid fears that a recent drop in bond prices would hurt profits.

"Until bond prices settle down, the stock market is going to remain unstable," said Sachio Ishikawa, manager at Chuo Securities.

Profits from bond trading and investments have been one of the only bright spots for many of Japan's debt-plagued banks and traders worry that a fall in bond prices will wipe out many of those gains.

Bank shares were also lower after US ratings agency Standard and Poor's said it lowered certain ratings on Dai-Ichi Kangyo Bank, Daiwa Bank, the Industrial Bank of Japan, Sakura Bank, Sanwa Bank, Sumitomo Bank, and Tokai Bank.