Stocks fell back Thursday as profit-taking gained the upper hand.
The Nikkei 225 average closed down 58.79 points at 15,037.24 after hitting a 64-month intraday high of 15,155.72 in early trading. On Wednesday, the key gauge surged 337.61 points.
The Topix dropped 7.62 points to end at 1,245.23 after climbing 22.05 points the previous day.
Opening higher in the wake of gains in European and U.S. stocks overnight, the TSE soon lost momentum as investors turned to sell stocks to lock in profits.
The Nikkei sank into negative territory and briefly fell more than 200 points in early afternoon trading, led by index futures.
But losses were trimmed late in the session thanks to buying on dips as investor sentiment remained bullish.
Mainstay issues that have risen sharply met with selling.
“Profit-taking swelled once some investors started selling after the Nikkei average failed to extend gains in early trading,” said Toshiyuki Kanayama, a market analyst at Monex Inc.
This is because “many market players had shared a sense of caution that the recent rally was too rapid,” Kanayama said.
“In light of the Nikkei average’s gain of more than 1,000 points since May 7, speed adjusting was needed,” he said.
But the market continued to be supported by hopes for effects from Prime Minister Shinzo Abe’s economic policies, brokers said. The economy grew at a higher than expected annual rate of 3.5 percent in January-March, according to government data released just before the opening bell.
Declining issues far outnumbered advancing ones 1,290 to 379 in the first section, while 44 issues were unchanged. Volume fell to 5.138 billion shares from Wednesday’s 5.752 billion.
Bank groups posted hefty losses a day after announcing forecasts that their net profit will fall in the year through March 2014.
JGBs bought on dips
Japanese government bonds bounced back on buying on dips Thursday, snapping a four-day losing streak.
The lead June futures contract on 10-year JGBs gained 0.38 point from Wednesday to end at 142.27. Turnover fell to 36,117 contracts from 58,197.
In late interdealer trading in cash JGBs, the yield on the latest 328th 10-year issue with a 0.6 percent coupon stood at 0.840 percent, down from 0.850 percent late Wednesday.