The Nikkei 225 average retreated Thursday, weighed down by selling to lock in profits after a surge the previous day.
The key market gauge closed 106.68 points lower at 11,357.07. On Wednesday, the Nikkei shot up 416.83 points to finish at its highest level since Sept. 29, 2008.
But the Topix edged 0.36 point higher to end at 969.18, its best closing since Feb. 21, 2011, after soaring 29.12 points Wednesday.
The market opened lower, dragged down by selling to cash in gains amid a halt in the yen’s easing.
Better than expected machinery orders data for December, released just before the opening bell, had only a limited impact, brokers said.
Still, investors bought shares of companies that have announced brisk earnings, such as automaker Mazda, an official at a bank-affiliated brokerage firm said.
“In view of the previous day’s surge, the Nikkei average’s correction today was no surprise,” said Hideyuki Suzuki, general manager and head of the investment market research department at SBI Securities Co.
Stock prices were supported by persistent expectations that the Bank of Japan will take aggressive monetary easing steps at an early time, after BOJ Gov. Masaaki Shirakawa announced his decision this week to step down in March before the end of his five-year term in April, brokers said.
“The Nikkei has risen more rapidly than I had expected. The upside of the index will be affected by how much the yen weakens,” Suzuki said.
Falling issues outpaced rising ones 877 to 708 in the first section, while 113 issues were unchanged. Trading remained active, with volume growing from 4.616 billion shares Wednesday to 5.140 billion, the second-highest level on record, after 5.777 billion shares marked March 15, 2011.
Camera maker Nikon plummeted 18.95 percent to score its daily limit loss, a day after the company downgraded its operating profit estimate for the year ending in March, brokers said.
By contrast, Mazda rocketed 12.01 percent to renew its 2012-2013 high after it revised up its full-year earnings forecast on Wednesday, market sources said.
JGBs rise further
Japanese government bonds continued to rise Thursday as stocks lost ground.
The lead March contract on 10-year JGBs gained 0.14 point from Wednesday to end at 144.15. Volume dwindled to 34,548 contracts from 41,480.